If it's all the same to you: blurred consumer perception and market structure

Research output: Contribution to journalJournal articleResearchpeer-review

  • Edward John Dorrell Webb
Consumers with bounded perception treat sufficiently similar goods as homogeneous. The effects of bounded perception on a vertically differentiated duopoly with sequential quality choice are examined. When quality entails fixed costs the market becomes more concentrated. When quality entails marginal costs, the second mover may profitably imitate the product of its rival, and the market is either more or less concentrated depending on how bounded perception is. When firms incur entry costs, neither firm may opt to produce when quality entails marginal costs, whereas at least one firm always produces when quality entails fixed costs.
Original languageEnglish
JournalReview of Industrial Organization
Issue number1
Pages (from-to)1-25
Number of pages25
Publication statusPublished - Feb 2017

    Research areas

  • Faculty of Social Sciences - Perception, Similarity, Bounded rationality, Bertrand competition, Vertical differentiation, Oligopoly

ID: 160056636