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A Note on the Costs of Quality in Vertically Differentiated Duopoly

Peter Michaelis & Thomas Ziesemer

Journal of Institutional and Theoretical Economics2025https://doi.org/10.1628/jite-2025-0029article
AJG 2ABDC B
Weight
0.50

Abstract

The literature on quality choice in vertically differentiated duopoly regularly assumes that either fixed costs or variable unit costs depend on quality. We analyze a generalized model where both types of costs are quality-dependent. Our findings are partially in contrast to the results obtained in the literature so far. In particular, the profit of the low-quality firm increases if variable unit costs increase for any level of quality. Hence, the low-quality firm has an incentive to engage in lobbying for governmental regulations that lead to rising variable costs of quality.

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https://doi.org/https://doi.org/10.1628/jite-2025-0029

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@article{peter2025,
  title        = {{A Note on the Costs of Quality in Vertically Differentiated Duopoly}},
  author       = {Peter Michaelis & Thomas Ziesemer},
  journal      = {Journal of Institutional and Theoretical Economics},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.1628/jite-2025-0029},
}

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A Note on the Costs of Quality in Vertically Differentiated Duopoly

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.