Arbeitspapier

Competitive market segmentation

In a two-firm model where each firm sells a high-quality and a low-quality version of a product, customers differ with respect to their brand preferences and their attitudes towards quality. We show that the standard result of quality-independent markups crucially depends on the assumption that the customers' valuation of quality is identical across firms. Once we relax this assumption, competition across qualities leads to second-degree price discrimination. We find that markups on low-quality products are higher if consuming a low-quality product involves a firm-specific disutility. Likewise, markups on high-quality products are higher if consuming a high-quality product creates a firm-specific surplus.

Sprache
Englisch

Erschienen in
Series: Discussion Papers ; No. 13-13

Klassifikation
Wirtschaft
Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
Oligopoly and Other Imperfect Markets
Information and Product Quality; Standardization and Compatibility
Thema
price differentiation
vertical competition

Ereignis
Geistige Schöpfung
(wer)
Sticher, Silvio
Ereignis
Veröffentlichung
(wer)
University of Bern, Department of Economics
(wo)
Bern
(wann)
2013

Handle
Letzte Aktualisierung
10.03.2025, 11:45 MEZ

Datenpartner

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ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Sticher, Silvio
  • University of Bern, Department of Economics

Entstanden

  • 2013

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