Percorrer por autor "Alventosa, Adriana"
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- How does firms’ cost structure affect their quality–price mix? An experimental analysisPublication . Alventosa, Adriana; Pires, Cesaltina Pacheco; Jorge, Sílvia Ferreira; Pinho, Joana; Catalão-Lopes, MargaridaExperimental literature on product differentiation is scarce and mostly focused on horizontal product differentiation. This paper focuses on vertical product differentiation considering a quality-then-pricing duopoly game and exploring how firms’ cost structure affects firms’ decisions and market structure. Two scenarios are considered, differing in the way quality affects production costs: in the first, quality is costless, while, in the second, marginal production costs increase with quality. We explore the impacts on market coverage, qualities, product differentiation, prices, and intensity of competition (assessed by price-cost margins). Our experimental results confirm the (theoretically proved) need to endogenize the market structure, as a duopoly with full coverage emerges when quality is costless, but a duopoly with partial coverage emerges when quality is costly. We also find that quality differentiation is lower in the lab than what is theoretically predicted, and lower in the costless quality treatment. The intensity of competition is higher when quality is costly, as price-cost margins are lower in this case.
- Market configurations when marginal costs are quality-dependentPublication . Pires, Cesaltina Pacheco; Jorge, Sílvia Ferreira; Catalão-Lopes, Margarida; Pinho, Joana; Garcês, Pedro; Alventosa, AdrianaMost quality-then-price decision models under vertical product differentiation consider a predetermined market configuration. We endogenize market configuration considering quality-dependent marginal costs and conclude that a strictly interior full coverage duopoly holds for some parameter values, unveiling the relevance of this commonly assumed market structure. Moreover, we show that a monopoly never arises in equilibrium, and (i) there are multiple equilibria at the frontier between interior and corner full coverage duopoly, (ii) the market is fully (partially) covered when relative tastes' heterogeneity is low (high), and (iii) there is a discontinuity in the transition from partial coverage to full coverage duopoly.
- Vertical product differentiation in the lab: impact of consumers’ preferencesPublication . Alventosa, Adriana; Pinho, Joana; Jorge, Sílvia Ferreira; Catalão-Lopes, MargaridaWe revisit a quality-then-pricing duopoly game, theoretically and experimentally exploring how heterogeneity in consumers’ preferences affects firms’ decisions and profits. We find that firms differentiate less their products in the lab than the theoretical model predicts, especially when the heterogeneity in consumers’ preferences is high. When this heterogeneity is small, the firm producing the low-quality good profits more than the rival in the lab, which contradicts the theoretical predictions.