WOULD YOU LIKE TO ENTER FIRST WITH A LOW‐QUALITY GOOD? |
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| Authors: | Luca Lambertini, Piero Tedeschi&dagger |
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| Affiliation: | Dipartimento di Scienze Economiche, Universitàdi Bologna, Italy, and ENCORE, Faculty of Economics and Econometrics, University of Amsterdam, The Netherlands;, and Istituto di Economia dell'Impresa e del Lavoro, UniversitàCattolica di Milano, Italy |
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| 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. |
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| Keywords: | entry vertical differentiation |
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