We characterize the equilibrium of a game in vertically differentiated market which exhibits network externalities. There are two firms, an incumbent and a potential entrant. Compatibility means in our model that the inherent qualities of the goods are close enough. By choosing its quality, the...

We suggest a model derived from the well-known Mussa and Rosen's model, in which two populations of consumers of opposite tastes co-exist: they rank in exactly the reverse order variants sold at the same price. This model may account for linked and contradictory characteristics in products (as...

A theoretical model is considered in a monopoly setting, where the production cost of the firm depends on the efforts of employees who may receive a positive part of the capital if the shareholders find profitable to do so. We specify the condition under which at Nash equilibrium the firm...

We analyze a spatial differentiation model with divisible consumption under one-stop shopping. Each consumer who visits only one store, chooses the quantities of the goods which maximize his/her utility function under the budget constraint (namely consumption expenditures must equal income minus...

This article contains a more complete characterization of conditions under which vertically differentiated markets are or are not natural oligopolies than has been found previously in the literature. Specifically, previous results on markets in which firms have cost functions with constant...

The results previously obtained on the finiteness property in vertically differentiated markets, with cost functions having increasing or decreasing returns, are extended to a much larger class of cost functions with local properties in a vicinity of the zero output. Moreover, existence results...

In this paper, we consider an incumbent firm facing potential entry in a vertical differentiation model a la Mussa and Rosen where consumers differ only by their intensity of preference for quality. We ask whether the incumbent firm has the incentive to adopt a multi-product strategy in order to...

In the case of natural duopoly, we suggest a finitely repeated game between two incumbent firms and a potential entrant that limits the incumbent firms' power and compels them to approach economic efficiency. We prove that such a game admits a perfect subgame equilibrium along which the...