סמינר בכלכלת עסקים ואסטרטגיה

Amit Gayer, Western Galilee College ,Department of Economics.

This work investigates markets with vertical product differentiation, where qualities are represented by an interval. 

Each firm has a convex production cost and can offer a multi-product strategy of quality-price pairs, and firms' profits are determined by the consumers' selection choice.

We show that under standard conditions on consumers' preferences:

1. In the case of a monopoly with a finite number of consumers - there will be market failure.

2. In the case of a monopoly with a continuum of consumers - when the market is fully served there will be no market failure.

3. In the case of an oligopoly with a finite number of consumers - in equilibrium, an endogenous monopoly will arise.

4. In the case of an oligopoly with a continuum of consumers - in equilibrium, an endogenous duopoly will arise.

5. In the case of a duopoly with a continuum of consumers - in equilibrium, each firm will offer an endogenous single pair.