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Exit with vertical product differentiation
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UNSPECIFIED (2005) Exit with vertical product differentiation. INTERNATIONAL JOURNAL OF INDUSTRIAL ORGANIZATION, 23 (3-4). pp. 227-247. doi:10.1016/j.ijindorg.2005.01.009
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Official URL: http://dx.doi.org/10.1016/j.ijindorg.2005.01.009
Abstract
This paper presents a duopoly model of exit from a declining industry with vertical product differentiation. It extends previous 10 models on exit that have so far ignored demand effects. The model shows how the interplay between demand and technological factors determine the order of exit. Therefore, demand factors are relevant and should be taken into account. Thus, the firm with a longer tenure as a profitable monopolist does not necessarily outlast its rival. In addition, this paper argues that the low-quality firm may find it optimal to stay in the market despite making temporary losses to outlast its rival. © 2005 Elsevier B.V. All rights reserved.
| Item Type: | Journal Article | ||||
|---|---|---|---|---|---|
| Subjects: | H Social Sciences > HC Economic History and Conditions | ||||
| Journal or Publication Title: | INTERNATIONAL JOURNAL OF INDUSTRIAL ORGANIZATION | ||||
| Publisher: | ELSEVIER SCIENCE BV | ||||
| ISSN: | 0167-7187 | ||||
| Official Date: | April 2005 | ||||
| Dates: |
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| Volume: | 23 | ||||
| Number: | 3-4 | ||||
| Number of Pages: | 21 | ||||
| Page Range: | pp. 227-247 | ||||
| DOI: | 10.1016/j.ijindorg.2005.01.009 | ||||
| Publication Status: | Published |
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