We study subgame-perfect equilibria of the classical quality-price, multistage game of vertical product differentiation …

differentiated along two dimensions: hedonic quality and environmental quality. The former dimension refers to the pure (intrinsic … preferences depend on a combination of hedonic quality and compliance with social norms. Assuming that the high hedonic quality … variant complies less with these norms than the low hedonic quality variant, we characterize different equilibrium …