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テクニカルレポート

ディスカッション／ワーキング・ペーパー

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Institute of Social and Economic Research Discussion Papers.854

Quality Improvement to Meet Competitive Fringe

The Institute of Social and Economic Research, Osaka University

英語

2012-08

http://hdl.handle.net/11094/23403

We investigate what kind of competitive pressure induces existing firms to engage in more intensive innovation activities. We examine two types of competitive pressure: a price decrease in competitive fringe firms and a quality improvement therein. We use an oligopoly model with vertical differentiation to investigate this question. We show that a decrease in the exogenous price of competitive firms induces the two existent leading firms (one high-quality firm and one mid-quality firm) to engage in quality investments more if the ex ante quality level of the high quality product is large enough; otherwise, only the mid-quality firm engages more in quality investment. We also show that an increase in the exogenous quality level of competitive firms diminishes the incentive of the mid-quality firm to engage in quality investments.

Quality Improvement to Meet Competitive Fringe

The Institute of Social and Economic Research, Osaka University

英語

2012-08

Institute of Social and Economic Research Discussion Papers

854

http://hdl.handle.net/11094/23403