Vertical Differentiation

Sur le marché des semi-conducteurs, deux géants se livrent une bataille féroce : Intel et AMD (Advance Micro Devices). Nous nous intéressons dans cet article à la compétition au sein du marché de microprocesseur de type x86 entre ces deux seuls joueurs en place. Nous exposons les grandes lignes de l’historique des firmes, la structure de secteur et les comportements concurrentielles entre les firmes. Un modèle simple est construit pour démontrer sur quelle mesure la différenciation verticale va impacter les caractéristiques de l’équilibre.

This thesis investigates the relationship between the distribution of non-European Union (EU) international students across the UK higher education sector and the characteristics of UK higher education institutions (HEIs) and the strategies they may pursue to make their provision more attractive to non-European Union (EU) international students. It looks at how this relationship has evolved since 1995/96, analysing the recruitment patterns of individual HEIs in relation to policy changes that may impact the number of students coming to UK higher education from outside the EU. To do so, I analyse an exceptionally large dataset, produced by UK’s Higher Education Statistics Agency (HESA), containing information on over 35 million higher education students covering a 22-year period. This study represents the first systematic longitudinal analysis of recruitment patterns of non-EU international students in UK HEIs for the past two decades. My analysis shows that UK institutional hierarchies play a pivotal in explaining the uneven distribution of non-EU internationals students across HEIs, particularly in policy environments that seek to restrict mobility. Understanding this unevenness is critical considering the terms in which non-EU international students are recruited in UK higher education. This subset of students represents a substantial resource –both financial and symbolic– in the sector, as they tend to pay higher fees than their domestic counterparts and are perceived as a marker of institutional prestige, as attested in some global league tables. Thus, the observed inequalities between institutions in terms of their shares of students who are non-EU international –with more prestigious HEIs overwhelmingly having higher shares– contribute to longstanding resource and prestige disparities in UK higher education. Moreover, this thesis investigates whether the position of universities within UK institutional hierarchies allows us to understand the strategies HEIs pursue to make their provision more attractive to non-EU international students. Drawing from the Bourdieusian concept of ‘field of power’ (1993) and its development by Marginson (2008), I argue that the position of a given  university in a hierarchy will shape their ‘space of possibles’ (Bourdieu 1993: 30; Marginson 2008: 307), that is the strategies that they may follow to successfully recruit non-EU international students. Previous research suggests that universities that recruit non-EU international students as a result of marketising their educational offering to a global audience, pitch their products to particularly lucrative markets, which results in certain institutions having particularly high concentrations of certain nationalities in certain subjects (Findlay et al. 2017). However, as I show in this thesis, the extent to which HEIs engage in these practices vary depending on their position in UK’s institutional hierarchy.

Film is an example par excellence of a product that is vertically differentiated, in that although each film is unique in some respects in relation to other films, they are not of equal attractiveness to audiences, perhaps because each member of an audience is a unique individual, which results in variations of taste over the ensemble of filmgoers. The industrial

We develop a vertical differentiation game-theoretic model that addresses the issue of designing free software samples (shareware) for attaining follow-on sales. When shareware can be reinstalled, cannibalization of sales of the commercial product may ensue. We analyze the optimal design of free software according to two characteristics: the evaluation period allotted for sampling (potentially renewable) and the proportion of features included in the sample. We introduce a new software classification scheme based on the characteristics of the sample that aid consumer learning. We find that the optimal combination of features and trial time greatly depends on the category of software within the classification scheme. Under alternative learning scenarios, we show that the monopolist may be better off not suppressing potential shareware reinstallation.

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This paper develops a model of price competition between two international airline alliances, with consumers' preferences vertically differentiated by the number of stops. Alliances benefit the interline passengers. Alliances with antitrust immunity do not benefit interline passengers more than those without antitrust immunity, in contrast to the Cournot-type settings. While antitrust immunity leads to higher fares for non-stop travel between hubs of alliance partners, granting it might be necessary to induce consolidation between carriers. Formation of alliances with antitrust immunity is consistent with the proposed model, even though such is likely to decrease individual carriers' profit.

This paper tests industry-specific hypotheses of the determinants of intra-industry trade in the context of Australia-UK trade. In doing so it separates intra-industry trade (IIT) into IIT in horizontally differentiated products and IiT in vertically differentiated products. It finds that the latter is the dominant former of IIT. Further the paper investigates the robustness of empirical results on testing industry-specific hypotheses to the choice of national (UK or Australian) industrial structure characteristics. The assumption of uniform industrial structures across countries adopted in other studies is shown not to be justified. 1987). This is a major shortcoming which has not been addressed. A final criticism of earlier cross-2% for example Leamer (1994). Gnxnaway and Milner (1987) and Greenaway and Tontensson (1997).

Suppose you are a Marketing Manager envisioning a new product, or an Operations Manager contemplating a process improvement, or a CEO who commissioned an integrated new product development team. If our assumptions hold, our model offers you a single numerical measure, called the degree of product/process innovation, to determine your initiative's impact on potential sales, prices, market segments, and profits. Our simple, single-period model is a variation of the existing vertically differentiated products model: There are two competing substitute products, and customers will buy at most one of them. Our contribution is to allow new relationships between the valuations of the two products by potential customers, and to allow differing unit production costs. We identify equilibrium results w hen two competing firms each offer one product, and find the profit maximizing result when one (monopolistic) firm offers both products. The new product infringes on the market in one of two ways: High-end encroachment results when the new product attracts the best customers (those with the highest reservation prices), while low-end encroachment identifies a situation where the new product attracts fringe (lower-end) customers. Low-end encroachment may help explain why an incumbent sometimes fails to recognize the threat of an entrant's product, as we illustrate with an example from the disk drive industry. In short, we offer insight into the value of both a marketing objective (enhancing the product design attributes) and a manufacturing goal (lowering the production cost) in a product and/or process improvement project.

In this paper, we examine national conditions that encourage the growth of a private regulatory environmental system to govern forests. Economic, institutional and social capital variables for 117 countries are used to examine factors determining forest certification under the Forest Stewardship Council and domestic competitor schemes. Although economic factors, such as forest exports and GDP, are important in explaining the likelihood that a country's forest management practices are certified, the regression results support the idea that economic institutions and the social context under which firms and forest landowners seek certification matters. The ability of citizens to influence the political process is also significant; in particular, the likelihood that firms and forest owners will seek to certify their forest practices is significantly reduced if women have little or no effective voice in civil society. D

This is a Working Paper and the author(s) would welcome any comments on the present text. Citations should refer to a Working Paper of the International Monetary Fund. The views expressed are those of the author(s) and do not necessarily represent those of the Fund.

We adopt a vertical differentiation model to study the effect of deregulation in the airline industry. In particular, we show that traditional carriers form international alliances on hub-and-spoke networks to compete against low cost companies, which successfully serve short haul routes at relatively cheap prices. The alliance is profitable if the gain in terms of economies of density is sufficiently high and consumers' utility is not significantly decreased by the indirect connection. Social welfare is also evaluated: we find interval regions where the alliance is welfare enhancing, even if it is not convenient for existing flag carriers.

In this paper, we examine national conditions that encourage the growth of a private regulatory environmental system to govern forests. Economic, institutional and social capital variables for 117 countries are used to examine factors determining forest certification under the Forest Stewardship Council and domestic competitor schemes. Although economic factors, such as forest exports and GDP, are important in explaining the likelihood that a country's forest management practices are certified, the regression results support the idea that economic institutions and the social context under which firms and forest landowners seek certification matters. The ability of citizens to influence the political process is also significant; in particular, the likelihood that firms and forest owners will seek to certify their forest practices is significantly reduced if women have little or no effective voice in civil society. D

Educational tracking is a very controversial issue in education. The tracking debate is about the virtues of uniformity and vertical differentiation in the curriculum and teaching. The pro-tracking group claims that curriculum and teaching better aimed at children's varied interest and skills will foster learning efficacy. The anti-tracking group claims that tracking systems are inefficient and unfair because they hinder learning and distribute learning inequitably. In this paper we provide a detailed within-country analysis of a specific educational system with a long history of early educational tracking between schools, namely the Flemish secondary school system in Belgium. This is interesting place to look because it provides a remarkable mix of excellence and inequality. Indeed the Flemish school system is repeatedly one of the best performer in the international harmonized PISA tests in math, science and reading; whereas it produces some of the most unequal distributions of learning between schools and students. Combining evidence from the PISA 2006 data set at the student and school level with recent statistical methods, we show first the dramatic impact of tracking on social segregation; and then, the impact of social segregation on equality of educational opportunity (adequately measured). It is shown that tracking, via social segregation, has a major effect on inequality of opportunity. Children of different economic classes will have different access to knowledge.

This paper tests industry-specific hypotheses of the determinants of intra-industry trade in the context of Australia-UK trade. In doing so it separates intra-industry trade (IIT) into IIT in horizontally differentiated products and IiT in vertically differentiated products. It finds that the latter is the dominant former of IIT. Further the paper investigates the robustness of empirical results on testing industry-specific hypotheses to the choice of national (UK or Australian) industrial structure characteristics. The assumption of uniform industrial structures across countries adopted in other studies is shown not to be justified. 1987). This is a major shortcoming which has not been addressed. A final criticism of earlier cross-2% for example Leamer (1994). Gnxnaway and Milner (1987) and Greenaway and Tontensson (1997). 19 1999. The Economic Society of Australia.

This paper empirically investigates a firm's propensity to patent. It thereby builds on a theoretical model on a firms' patenting decision in a market with vertically differentiated products. We deduce and empirically test several hypotheses from the theoretical results regarding patenting and rival's market entry decision presented in Zaby (2009). Our main finding is that in industries which are characterized

This paper examines the relationship between per capita GDP differences and bilateral intraindustry trade shares. The relationship is negative in OLS regressions but positive in fixed-effect regressions, and evidence is presented suggesting this is due to the presence of vertically differentiated trade. The paper begins by distinguishing between vertically and horizontally differentiated trade, and then finds a positive and significant relationship between GDP per capita differences and the trade shares only in the regressions on the vertically differentiated trade shares. It is shown also that the extent to which income distributions overlap affects only the share of vertically differentiated trade.

This paper studies the provision of environmental quality in an imperfectly competitive market. It uses a vertical differentiation model in which the free entry equilibrium results in an under-provision of quality. The following main results are obtained. First, a commodity tax ...

Educational tracking is a very controversial issue in education. The tracking debate is about the virtues of uniformity and vertical differentiation in the curriculum and teaching. The pro-tracking group claims that curriculum and teaching better aimed at children's varied interest and skills will foster learning efficacy. The anti-tracking group claims that tracking systems are inefficient and unfair because they hinder learning and distribute learning inequitably. In this paper we provide a detailed within-country analysis of a specific educational system with a long history of early educational tracking between schools, namely the Flemish secondary school system in Belgium. This is interesting place to look because it provides a remarkable mix of excellence and inequality. Indeed the Flemish school system is repeatedly one of the best performer in the international harmonized PISA tests in math, science and reading; whereas it produces some of the most unequal distributions ...

for helpful comments. We have also benefitted from the comments of two anonymous referees and a co-editor. The usual disclaimer, unfortunately, applies. Any opinions expressed are those of the authors and not those of the National Bureau of Economic Research.

As was shown in some previous studies, the creation of the North American Free Trade American (NAFTA) has significantly increased trade and investment flows between member countries. Consequently, it seems appropriate to analyze the incidences of the free trade agreement on the nature of trade. In this paper, we study the intra-industry trade in the automobile industry within the NAFTA area. Our results highlight an increase in intra-industry trade since the beginning of the 1990s. The importance of intra-industry trade is evaluated with the Grubel and Lloyd indicator (1975). For final and intermediate goods, we distinguish those which are horizontally differentiated in quality (differences in unit values) from those in varieties (similar unit values). In NAFTA, intra- industry trade exists in most sectors and in two bilateral relations (United States-Canada and United States-Mexico). Therefore, we analyze the nature of that increase and more precisely, the determinants of intra-ind...

This study identifies country and industry-level determinants of intra-industry trade (IIT) between the United States and developing countries. IIT is found to decline with greater differences in relative factor endowments. Economic size and trade orientation of the developing country influence IIT in a positive way. Distance exerts a negative effect on IIT. Results show IIT occurs in nonstandard, made-to-order, vertically

Montréal. Il a pour mission la promotion et la valorisation de la recherche. Érudit offre des services d'édition numérique de documents scientifiques depuis 1998. Pour communiquer avec les responsables d'Érudit : erudit@umontreal.ca Article Christos Constantatos et Stylianos Perrakis L'Actualité économique, vol. 71, n° 1, 1995, p. 71-98. Pour citer cet article, utiliser l'adresse suivante : http://id.erudit.org/iderudit/602167ar Note : les règles d'écriture des références bibliographiques peuvent varier selon les différents domaines du savoir. Ce document est protégé par la loi sur le droit d'auteur. L'utilisation des services d'Érudit (y compris la reproduction) est assujettie à sa politique d'utilisation que vous pouvez consulter à l'URI http://www.erudit.org/apropos/utilisation.html Document téléchargé le 9 July 2011 12:49 « Différenciation verticale et structure du marché » L'Actualité économique, Revue d'analyse économique, vol. 71, n° 1, mars 1995 Différenciation verticale et structure du marché* Christos CONSTANTATOS Département d'économique Université Laval GREEN Stylianos PERRAKIS Faculté d'administration Université d'Ottawa

We examine how product and pricing decisions of retail gasoline stations depend on local market demographics and the degree of competitive intensity in the market. We are able to shed light on the observed empirical phenomenon that proximate gasoline stations price very similarly in some markets, but very differently in other markets. Our analysis of product design and price competition between firms integrates two critical dimensions of heterogeneity across consumers: Consumers differ in their locations and in their travel costs, as in models of horizontal differentiation. They also differ in their relative preference or valuations for product quality dimensions, in terms of the offered station services (such as pay-at-pump, number of service bays or other added services), as in models of vertical differentiation. We find that the degree of local competitive intensity and the dispersion in consumer incomes are sufficient to explain variations in the product and pricing choices of competing firms. Closely located retailers who face sufficient income dispersion across consumers in a local market may differentiate on product design and pricing strategies. In contrast, retailers that are farther apart from each other may adopt similar product design and pricing strategies if the market is relatively homogeneous on income. Using empirical survey data on prices and station characteristics gathered across 724 gasoline stations in the St. Louis metropolitan area, and employing a multivariate logit model that predicts the joint probability of stations within a local market differentiating on product 206 G. Iyer, P.B. Seetharaman design and pricing strategies as a function of market demographics and local competitive intensity, we find strong support for the central implications of the theory.

Using a cross-country analysis, this paper examines the determinants of the Italian intra-industry trade in vertically differentiated products. By considering the degree of specialization by quality within industries, we found that Italys IIT in low-quality products is higher the lower the factor endowment difference and the higher the technological gap with the partner country. These findings confirm the peculiarity of

Recently, non-axisymmetric convection in vertical directional solidification experiments has been observed. It has been suggested that the asymmetry is due to lack of azimuthal symmetry in imposed temperature and that the flow asymmetry will decrease with increasing velocities. Motivated by these observations we have examined the consequences of deviations from axisymmetric wall temperature conditions in a vertical differentially heated cylinder. We show that the degree of flow asymmetry depends on the ratio, A,, between the amplitudes of the maximum azimuthal and vertical temperature differences, and that for a fixed value of this ratio the flow asymmetry increases with increasing flow velocity (Rayleigh number).

We consider two firms introducing vertically differentiated products to a market ruled by the consumers’ willingnessto-pay. If consumers behave indifferently to all the products, they would always choose the product which offers highest net utility. The paper considers a more realistic case in which high utility products do not necessarily satisfy the consumers who are sensitive to price enhancements. They are eager to analyze whether choosing a new entrant offering higher quality products is worth the price. In such a setup, competing firms offering vertically differentiated products could employ cooperative bundles. By introducing new products in stages, we show that the market gets divided based on consumers’ willingness to pay more for an expensive product. We have employed computational method on a newly built coopetition model. Our results show that cross bundling can improve both sellers’ profits, also leading to a boost in the entrant’s position in the market. In fact, the applied strategy of simultaneous cooperation and competition in this paper shows that, coopetition drives consumers’ attention to purchase cross-bundles instead of individual products or direct bundles, which in the end benefits both firms. Also it is shown that previous solutions are not necessarily optimal for duopolies practicing coopetition.

Double marginalization causes inefficiencies in vertical markets. This paper argues that such inefficiencies may be beneficial to final consumers in markets producing vertically differentiated goods. The rationale behind this result is that enhancing efficiency in high-quality supply chains through vertical integration may drive out of the market low-quality ones, thus affecting market structure. As a consequence, restoring-efficiency vertical integration may reduce consumer surplus, even in the absence of foreclosure strategies by the newly integrated firms. From a policy standpoint, our paper suggests that input and/or customer foreclosure should not be considered as the only source of antitrust concern when assessing the effects of vertical integration.

We document the evolution of product innovation and features in the mobile telephone handset market. We distinguish between two types of product innovation: vertical and horizontal innovation. Using data from 1990 -2003, we find that some characteristics have subsequently become an industry standard, while some remained as horizontally differentiating features of mobile handsets. We explain this pattern using the concept of dominant design, and results from the theoretical literature on the incentives for horizontal and vertical differentiation.

In a vertically differentiated industry a domestic and a foreign firm first choose the quality of their goods and then compete in quantities, or prices, in the home market. We investigate the cases in which a tariff is chosen before, or after, the firms' quality decision. These cases are referred to as the ex-ante and the ex-post game, respectively. Optimal ex-post tariffs are positive and ensure that the domestic firm always produces the high quality good. The optimal ex-ante tariff is prohibitive and welfare under domestic monopoly is lower than under ex-post tariffs, unless firms compete in prices and the domestic firm is high quality.

We consider a model of vertical competition where downstream firms (retailers) purchase an upstream input from a monopolist and are able to differentiate from each other in terms of quality. Our primary focus is to study the effects of introducing a large retailer, such as a Wal-Mart Supercenter, that is able to lower wholesale prices (i.e. buyer market power). We obtain two main results. First, the store with no buyer market power responds to the presence of the large retailer by increasing its quality, a finding that is consistent with recent efforts by traditional retailers to enhance shoppers' buying experience (i.e. quality). Second, the presence of a large retailer causes consumer welfare to increase. There are, however, two reasons for the increase in consumer welfare: consumers gain from the large retailer's low price (because the upstream discount is partially passed on to the retail price) as well as from the high quality level offered by the traditional retailer. Contrary to the conventional wisdom most of the consumer welfare gains seem due to the latter. The intuition for this result is that price competition softens substantially as a result of firms' quality differentiation. We also investigate the effects of buyer market power on retail and wholesale prices as well as on producer welfare.

The three-dimensional (3D) Rossby wave energy dispersion of a tropical cyclone (TC) is studied using a baroclinic primitive equation model. The model is initialized with a symmetric vortex on a beta plane in an environment at rest. The vortex intensifies while becoming asymmetric and moving northwestward because of the beta effect. A synoptic-scale wave train forms in its wake a few days later. The energy-dispersioninduced Rossby wave train has a noticeable baroclinic structure with alternating cyclonic-anticycloniccyclonic (anticyclonic-cyclonic-anticyclonic) circulations in the lower (upper) troposphere.

This paper addresses the question of how the vertical structure of a product line relates to brand equity. Does the presence of "premium" or high-quality products in a product line enhance brand equity? Conversely, does the presence of "economy" or low-quality products in a product line diminish brand equity? Economists and marketing researchers refer to variation in quality levels of products within a category as "vertical" differentiation, whereas variation in the function or "category" of the products is referred to as "horizontal" differentiation. Much of the existing research on the relationship between product line structure and brand equity has focused on the horizontal structure of the product line and has been primarily concerned with brand extensionswhat happens when the product line of a brand is extended horizontally into new categories? Researchers have been concerned primarily with how the extension fares, but the effect of the extension on the core products is also important. There is an analogous question of what happens when the product line of a brand is extended vertically, either "up market" or "down market." This question of vertical extensions is part of the more general issue of how the vertical structure of a product line relates to brand equity.

Drilling at Soultz-sous-Forêts, France, conducted as part of the European 'Hot Dry Rock' Project, penetrated the Rhine Graben basement down to 5 090 m and revealed a porphyritic monzogranite. Chemical composition and REE patterns of three samples at 5 km depth indicate homogeneous composition with a slight vertical differentiation, suggesting stable P-T conditions after the magma emplacement. U/Pb ion-probe zircon dating provides an emplacement age at 331 ± 9 Ma. This age is in agreement with those of the other intrusive granitoids in this part of the Variscan segment, indicating a period of intensive magmatic activity around 330 Ma.  2001 Académie des sciences / Éditions scientifiques et médicales Elsevier SAS U/Pb geochronology / ion-probe / zircons / Visean / Soultz-sous-Forêts / Rhine Graben / France Résumé-Âge de mise en place à 331 ± 9 Ma du monzogranite de Soultz (socle du graben du Rhin) par datation U/Pb sur zircon à la microsonde ionique d'échantillons de 5 km de profondeur. Dans le cadre du projet Européen Hot Dry Rock de Soultz-sous-Forêts (France), plusieurs sondages ont été réalisés dans le socle du graben du Rhin, dont un jusqu'à 5 090 m de profondeur, qui ont mis en évidence un monzonite porphyrique. La composition chimique et les spectres de terres rares montrent une composition homogène, avec une légère différenciation verticale, ce qui suggère des conditions P-T stables après la mise en place du magma. Une datation U/Pb à la microsonde ionique sur zircons a fourni un âge de 331 ± 9 Ma. Cet âge est compatible avec ceux des autres granitoïdes affleurant dans cette partie de la chaîne Varisque, et indique une période d'activité magmatique intense vers 330 Ma.

In this article, we show that in models where location is endogenous,
maximum welfare losses arising from non-optimal locations or from the lack of
market coverage may be substantial. In contrast, maximum welfare losses arising from non-optimal quality choices are more modest, but they might vary
discontinuously with the dispersion in consumer tastes. Very often, welfare
losses can be inferred from data

This paper presents a theoretical and empirical study of price formation in markets where goods differ in two attributes, perceived quality of each variety, and service provided by the store where the good is sold. Price competition in the vertically differentiated market is modeled as a two-stage game where manufacturers choose the contract that determines wholesale prices, and retailers choose consumer prices. One important novelty of the paper is that it contemplates competition between brands of different quality in the same store, and competition between brands of the same quality sold at different stores. This is in fact the situation observed in the domestic detergent market and the predictions of the model can be used to guide the empirical analysis of the data available for such market in the area of Barcelona, Spain.

This study examines the determinants of Turkish outward FDI employing a gravity model. The model estimates the impact of traditional gravity variables, as well as openness, labour productivity, infrastructure, institutions and economic stability on FDI outflows from Turkey to 11 countries, which account for approximately 90% of Turkish outward FDI stock, over the period 1999-2005 years using panel data random effects technique. The results reveal that Turkish FDI has a market-seeking pattern with foreign markets being substituted for domestic market by Turkish firms. On the other hand, economic instability in Turkey emerges as a major deterrent of FDI outflows. Additionally, our results suggest the possibility of FDI in vertically differentiated products in host countries by Turkish investors as well as the importance of push factors.

We analyze the effect of competition in market-accessibility enhancement among quality-differentiated firms. Firms are located in regions with different ex-ante transport costs to reach the final market. We characterize the equilibrium of the two-stage game in which firms first invest to improve market accessibility and then compete in prices. Efforts in accessibility improvement crucially depend on the interplay between the willingness to pay for the quality premium of the median consumer and the ex-ante difference in accessibility between regions. From the social standpoint, all the accessibility investment should be carried out by the high-quality firm. Finally quality choice is endogenized.

This paper analyzes the regulation of payment schemes for health care providers competing in both quality and product differentiation of their services. The regulator uses two instruments: a prospective payment per patient and a cost reimbursement rate. When the regulator can only use a prospective payment, the optimal price involves a trade-off between the level of quality provision and the level of horizontal differentiation. If this pure prospective payment leads to underprovision of quality and overdifferentiation, a mixed reimbursement scheme allows the regulator to improve the allocation efficiency. This is true for a relatively low level of patients'transportation costs. We also show that if the regulator cannot commit to the level of the cost reimbursement rate, the resulting allocation can dominate the one with full commitment. In particular, some cost reimbursement might be optimal even for higher levels of transportation costs.