Template-Type: ReDIF-Paper 1.0
Title: Can price discrimination lead to product differentiation? A vertical differentiation model
Author-Name: Fabian Herweg
Author-Email: fherweg@uni-bonn.de
Classification-JEL: D43, L11, L13
Keywords: Duopoly, Two-part tariff, Vertical differentiation
Abstract: In this paper, I compare two-part tariff competition to linear pricing 
	in a vertically differentiated duopoly. Consumers have identical tastes 
	for quality but differ in their preferences for quantity. The main 
	finding is that quality differentiation occurs in equilibrium if and 
	only if two-part tariffs are permitted. Furthermore, two-part tariff 
	competition encourages entry, which in turn increases welfare. 
	Nevertheless, two-part tariff competition decreases consumers' surplus 
	compared to linear pricing.
Note: 
Length: 24
Creation-Date: 2007-03
Revision-Date: 
File-URL: http://www.wiwi.uni-bonn.de/bgsepapers/bonedp/bgse2_2007.pdf
File-Format: application/pdf
Handle: RePEc:bon:bonedp:bgse2_2007