|Ph.D Student||Gayer Amit|
|Subject||Oligopoly, Endogenous Monopolist and Product Quality|
|Department||Department of Industrial Engineering and Management||Supervisors||Professor Benyamin Shitovitz|
|Professor Abraham Subotnik|
This work investigates an oligopolistic market with vertical product differentiation, where qualities are represented by an uni-dimensional interval. We examine the Bertrand-Nash equilibrium in the oligopoly game with a finite number of consumers, where each firm uses its technology and can offer a range of quality-price pairs, and firms’ profits are determined by the consumer’ selection choice. We show that under the standard conditions on consumers’ preferences at most one firm with a positive profit can be sustained in equilibrium. We also present an example of a duopoly market where a Bertrand-Nash equilibrium fails to exist. We also show that in the case of multiple symmetric firms there are only zero profit equilibria. Finally, we apply our results to the linear case.