The Economics Of Vertically Differentiated Markets

‘This is a high-quality book on an important and central topic in the theory of industrial organisation. It is a cohesive and extremely well written volume which is destined to become a standard work on the subject.’
– Mark Casson, University of Reading, UK

This original new book offers a comprehensive and engaging perspective on the theory of vertical differentiation. It enables the reader to grasp the key concepts and effects that product quality has both on firms’ behaviour and market structure, and the ways in which this relationship has evolved.

With contributions from prominent figures in the field, the book investigates a number of important topics, such as the choice of the optimal product range, profit sharing, the existence of equilibrium in duopoly games, positional effects attached to status goods, international trade, collusion, advertising and the dynamics of capital accumulation for quality improvement and product innovation. Using both static and dynamic approaches, these aspects are assessed in relation to the manifold issues of regulation, competition policy and trade policy.

Product differentiation and its influence on consumer behaviour and the performance of firms is a core topic in the existing literature in the fields of industrial organization, international trade and economic growth. This book will be an essential read for researchers, students and professional scholars working in these areas, especially those with an interest in antitrust regulation.

Contents:

Preface

PART I: STATICS
1. Does Monopoly Undersupply Product Quality?
Luca Lambertini

2. Multiproduct Monopoly with Positional Externalities
Luca Lambertini and Raimondello Orsini

3. Labour-managed Multiproduct Monopoly
Chiara Celada and Luca Lambertini

4. Endogenous Timing in a Vertically Differentiated Duopoly
Luca Lambertini

5. Existence of Equilibrium in a Vertically Differentiated Duopoly
Giulio Ecchia and Luca Lambertini

6. MQS Regulation and Predatory Behaviour
Luca Lambertini and Carlo Scarpa

7. Intraindustry Trade and the Choice of Technology
Luca Lambertini and Gianpaolo Rossini

PART II: DYNAMICS
8. RJVs for Product Innovation and Cartel Stability
Cristina Iori and Luca Lambertini

9. Product Innovation with Sequential Entry
Giorgia Bertuzzi and Luca Lambertini

10. A Differential Game with Quality Improvement
Luca Lambertini

11. A Differential Game of Advertising under Vertical Differentiation
Luca Colombo and Luca Lambertini

Index