Quality Improvement to Meet Competitive Fringe

Matsushima, Noriaki; Liu, Ren-Jye

Institute of Social and Economic Research Discussion Papers, 2012, 854

Number of Access:437（2025-07-24 04:44 Counts）

Identifier to cite or link to this item: https://hdl.handle.net/11094/23403

Item Information

Output File Export EndNote Basic Export Mendeley

Title
Quality Improvement to Meet Competitive Fringe
Creator
NRID
1000080334879 1000080334879
ORCID
0000-0002-7865-3875 0000-0002-7865-3875
researchmap permalink
read0116301 read0116301
Scopus Author ID
7005645778 7005645778
CreatorName
Matsushima, Noriaki
CreatorName
Liu, Ren-Jye
Subject
fringe firms
competitive pressure
investments
vertical differentiation
Abstract
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.
Publisher
The Institute of Social and Economic Research, Osaka University
Source Title
Institute of Social and Economic Research Discussion Papers
Volume (Issue)
854
Date of Issued
2012-08
Language
English
Handle URL
https://hdl.handle.net/11094/23403
Relation.references
URI
https://www.iser.osaka-u.ac.jp/static/resources/docs/dp/2012/DP0854.pdf
Access Rights
metadata only access
Category
ディスカッション／ワーキング・ペーパー DP/WP
Institute of Social and Economic Research Discussion Papers