The differentiation triangle

Marcel Canoy, Martin Peitz

Research output: Contribution to JournalArticleAcademicpeer-review


The paper formalizes the observation that submarkets for high-quality and low-quality variants are markedly different from each other. We study a simple model where variants of low quality cannot be horizontally differentiated, whereas customers disagree about the value of variants in the high-quality range. We determine the outcome under price competition in the differentiation triangle with sequential entry when each firm can develop the vertical product line or decide to follow a niche strategy, i.e. to develop only one variant.

Original languageEnglish
Pages (from-to)305-328
Number of pages24
JournalJournal of Industrial Economics
Issue number3
Publication statusPublished - Sept 1997
Externally publishedYes

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