Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments July 30, 2021 erstellt
Beschreibung:
This work builds and tests a vertical product differentiation duopoly model, where firms first choose quality and then choose prices, in the lab. We consider both the case in which production costs are unaffected by the quality of the good produced and the case in which production costs increase with quality. Results indicate that, overall, firms differentiated their products less than theoretically predicted, and prices are set just to cover marginal costs. Regardless of the cost structure, the firm attracting more consumers makes higher profits. Moving from a scenario in which quality is costless to a scenario in which it is costly: decreases qualities, increases prices, and decreases the number of consumers served