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| Author: | Aoki, R. Prusa, T. |
| Title: | Sequential versus simultaneous choice with endogenous quality |
| Journal: | International Journal of Industrial Organization
1997 : FEB, VOL. 15:1, p. 103-122 |
| Index terms: | INTERNATIONAL ORGANIZATIONS ENDOGENOUS VARIABLES QUALITY |
| Language: | eng |
| Abstract: | In this paper the authors examine how the timing of investment affects the levels of quality chosen by firms. They show that in a model with vertical quality differentiation a game with sequential quality choice induces both firms to make smaller quality investments than they would in a game with simultaneous quality choice. Furthermore, they show that while aggregate profit is higher, both consumer and social surplus are lower under sequential quality choice. |
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