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Chinese Journal of Management Science ›› 2014, Vol. 22 ›› Issue (8): 141-148.

• Articles • Previous Articles    

Market Leadership and Industrial Quality:an Endogenous Quality and Timing Model

YE Guang-liang1, WANG Xin2   

  1. 1. Renmin University of China, Beijing 100872, China;
    2. Sanya University Sanya 572022, China
  • Received:2011-10-03 Revised:2014-04-29 Online:2014-08-20 Published:2014-08-23

Abstract: Effects of pricing leadership on endogenous quality decisions in a duopoly are examined with vertical product differentiation. The study that quality gap between high and low quality products decreases in the market with leadership (sequential game) compared to the market without leadership (simultaneous game). Follower's profit always increases but the leader's profit decreases. Furthermore, both consumer surplus and social welfare decreases in the leadership model. Finally, it also can be found that with a single pre-game delay stage, the resulting endogenous timing has both firms being followers.

Key words: price competition, endogenous quality, endogenous timing

CLC Number: