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- W836039726 abstract "In our model of product differentiation two duopolists competeover prices and (costly) socially and environmentally responsible features of their products. We show that the incumbent finds it optimal to reduce the price after the producer's entry when his (nonethical) location is fixed. His optimal price is halfway between his zero profit price and the zero profit price of the producer. By removing the fixed location hypothesis we find that the producer’s entry has positive indirect effects on aggregate social and environmental responsibility since the incumbent finds it optimal to imitate him when consumers’ perception of costs is sufficientlyhigh. In the paper we also show that the solution of the three-stage game - in which location and prices are simultaneously chosen and the profit maximising producer is Stackelberg leader in location – has three main features: minimum price differentiation, imitation and non minimal differentiation. We explain the differences between these findings and those from atraditional Hotelling game as depending from three main features: 1) the different goals of the two (profit maximising and zero profit) competitors; 2) the asymmetric costs of ethical distance and 3) the lack of independence between location and prices." @default.
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- W836039726 date "2006-03-27" @default.
- W836039726 modified "2023-09-23" @default.
- W836039726 title "On ethical product differentiation" @default.
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