Markets with technological progress: Pricing, quality, and novelty

Arbeitspapier

New and old products differ in two respects: quality and newness. Whereas a higher quality of a new product always benefits consumers, the newness itself benefits some consumers, but not others, and for some, it is even a disadvantage. We capture these features in a Hotelling model of OverLapping Innovators (HOLI model), entailing a sequence of static Hotelling games of horizontal product differentiation (newness), that we extend by vertical product differentiation (quality). In this model, the firms compete on quality and price. Using advanced dynamic hedonic regression methods, we empirically investigate the pricing policy of firms in the German laser printer market. We show that their pricing corresponds to our model with the entrant acting as the Stackelberg follower.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Research Papers in Economics ; No. 5/14

Classification and Topics

• Classification: Wirtschaft ; Production, Pricing, and Market Structure; Size Distribution of Firms ; Microelectronics; Computers; Communications Equipment ; Single Equation Models; Single Variables: Panel Data Models; Spatio-temporal Models
• Subject: hotelling ; vertical product differentiation ; hedonic regression ; Stackelberg ; laser printer

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): von Auer, Ludwig ; Trede, Mark
• Event: Veröffentlichung
• (who): Universität Trier, Fachbereich IV – Volkswirtschaftslehre
• (where): Trier
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/104554
• Last update: 10.03.2025, 11:43 AM CET