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Consumer Targeting Under Quality Competition In A Liberalized Vertically Differentiated Market

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  • Rajat Acharyya

    (Department of Economics, Jadavpur University)

Abstract

This paper examines consumer targeting by cost-asymmetric home incumbent and foreign entrant under quality and price competition among them in a liberalized home-country market. With the home incumbent offering a price-quality menu before the foreign entrant offers his menu, the extent to which the home incumbent enjoys a home-market advantage over a technologically efficient foreign entrant determines the nature of market segmentation. When the home-market advantage is not too large, the home incumbent targets accommodates entry by targeting only the low-type home consumers. Gains from liberalization, however, depends to a large extent on the distribution of home consumers over different types.

Suggested Citation

  • Rajat Acharyya, 2005. "Consumer Targeting Under Quality Competition In A Liberalized Vertically Differentiated Market," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 30(1), pages 129-150, June.
    • Handle: RePEc:jed:journl:v:30:y:2005:i:1:p:129-150
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Kiyoshi Matsubara, 2011. "Product Quality in Different Markets and Cost Structure," ERSA conference papers ersa11p1062, European Regional Science Association.
    2. Kiyoshi Matsubara, 2012. "Home-Market and Cost Effects of International Product-Quality Allocation," ERSA conference papers ersa12p284, European Regional Science Association.
    3. Li, Dong & Nagurney, Anna, 2015. "A general multitiered supply chain network model of quality competition with suppliers," International Journal of Production Economics, Elsevier, vol. 170(PA), pages 336-356.
    4. Nagurney, Anna & Saberi, Sara & Shukla, Shivani & Floden, Jonas, 2015. "Supply chain network competition in price and quality with multiple manufacturers and freight service providers," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 77(C), pages 248-267.
    5. Anna Nagurney & Dong Li, 2015. "A supply chain network game theory model with product differentiation, outsourcing of production and distribution, and quality and price competition," Annals of Operations Research, Springer, vol. 226(1), pages 479-503, March.

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    More about this item

    Keywords

    Consumer Targeting; Quality Competition; Liberalization; Accommodating Entry;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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