Would You Like to Enter First with a Low-Quality Good?

14 Pages Posted: 27 Jun 2007

See all articles by Luca Lambertini

Luca Lambertini

University of Bologna - Department of Economics

Piero Tedeschi

Università Cattolica; Catholic University of the Sacred Heart of Milan

Abstract

Using a two-period duopoly model with vertical differentiation, we show that there exists a unique subgame perfect equilibrium where the first entrant supplies a lower quality and gains higher profits than the second entrant. We also prove that this entry sequence is socially efficient.

Suggested Citation

Lambertini, Luca and Tedeschi, Piero, Would You Like to Enter First with a Low-Quality Good?. Bulletin of Economic Research, Vol. 59, No. 3, pp. 269-282, July 2007, Available at SSRN: https://ssrn.com/abstract=995875 or http://dx.doi.org/10.1111/j.0307-3378.2007.00262.x

Luca Lambertini (Contact Author)

University of Bologna - Department of Economics ( email )

Strada Maggiore 45
Bologna, 40125
Italy
+39 051 2092600 (Phone)
+39 051 2092664 (Fax)

Piero Tedeschi

Università Cattolica ( email )

United States
+390272342779 (Phone)
+390272342781 (Fax)

Catholic University of the Sacred Heart of Milan

Italy

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