<abstract xmlns="http://www.w3.org/1999/xhtml"><p> We study an entrant firm’s product quality choice and the price competition arising between the entrant and the incumbent firm. We show that the entrant firm should introduce a relatively higher (lower) quality than the incumbent firm when the consumers’ valuation for quality is sufficiently large (small). We also study how the incumbent firm modifies its price in response to the ensuing price competition. We find that the incumbent firm should decrease its price. We also profile how the incumbent firm’s price non-linearly depends on consumers’ valuation for quality.</p></abstract>

We study an entrant firm’s product quality choice and the price competition arising between the entrant and the incumbent firm. We show that the entrant firm should introduce a relatively higher (lower) quality than the incumbent firm when the consumers’ valuation for quality is sufficiently large (small). We also study how the incumbent firm modifies its price in response to the ensuing price competition. We find that the incumbent firm should decrease its price. We also profile how the incumbent firm’s price non-linearly depends on consumers’ valuation for quality.

Market Entry, Product Quality And Price Competition

Department of Marketing, Indian Institute of Management, Lucknow, India

Studies in Business and Economics

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

{"article-title":"Market Entry, Product Quality And Price Competition"}

We study an entrant firm’s product quality choice and the price competition arising between the entrant and the incumbent firm. We show that the entrant firm...

Market Entry, Product Quality And Price Competition

Published Online: Sep 25, 2015

Page range: 62 - 82

DOI: https://doi.org/10.1515/sbe-2015-0021

Keywords
Market entry, quality, pricing, marketing, strategy, competition

© 2015

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Market Entry, Product Quality And Price Competition

Published Online: Sep 25, 2015

Page range: 62 - 82

DOI: https://doi.org/10.1515/sbe-2015-0021

KeywordsMarket entry, quality, pricing, marketing, strategy, competition

© 2015

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Keywords
Market entry, quality, pricing, marketing, strategy, competition