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| Author: | Deneckere, R. Palma, A. de |
| Title: | The diffusion of consumer durables in a vertically differentiated oligopoly. |
| Journal: | RAND Journal of Economics
1998 : WIN, VOL. 29:4, p. 750-771 |
| Index terms: | Consumer durables Oligopoly Imperfect competition |
| Language: | eng |
| Abstract: | The authors analyze a vertically differentiated durable goods duopoly and show that there exists a unique equilibrium in open-loop strategies in which both firms engage in intertemporal price discrimination, so that the market eventually saturates. Price levels depend not only on the similarity of the two products, but also on how readily the low-quality manufacturer's customers abstain from purchasing in order to obtain the high-quality good at a reduced price in the future. When quality choice is endogenized, substantially less vertical differentiation arises than would occur for nondurables. |
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