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    Customization in an Endogenous-Timing Game with Vertical Differentiation

    Loginova, Oksana
    Wang, X. H. (X. Henry), 1962-
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    [PDF] CustomizationEndogenousTimingGame.pdf (274.4Kb)
    Date
    2008
    Format
    Working Paper
    Metadata
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    Abstract
    We study customization in a duopoly game in which the firms' products have different qualities. Whether customization choices are made simultaneously or sequentially is endogenously determined. Specifically, the customization stage of the game involves two periods. Each firm either selects its product type in period 1 or postpones this decision to period 2. We show that both quality and endogenous timing play important roles in determining the equilibrium outcome. Customization occurs only if the quality difference is sufficiently large. Endogenous timing sometimes enables the firms to achieve an outcome that is Pareto superior to that if they were to make their customization choices simultaneously. Although the higher quality firm is more likely to customize, endogenous timing sometimes enables the lower quality firm to obtain an advantage that it would not have under simultaneous customization choices.
    URI
    http://hdl.handle.net/10355/2390
    Part of
    Working papers (Department of Economics);WP 08-15
    Part of
    Economics publications
    Citation
    Department of Economics, 2008
    Rights
    OpenAccess.
    This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 License.
    Collections
    • Economics publications (MU)

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