| Summary: | 碩士 === 東海大學 === 國際貿易學系 === 97 === This paper mainly discusses about the economic effect of product differentiation on asymmetric vertically integrated firms. We extend the model of Stefan Buehler, Armin Schmutzler (2008), assuming that there is duopoly competition in the market, and put the variable product differentiation in this model. We focus on how product differentiation influence firm’s decision variables. According to the result, product differentiation indeed has effect on cost-down investments, intimidation effect, and other economic variables.
The findings of this paper are:
1. When the degree of product differentiation increases, the cost-down investments, output, and final product price of the non-vertically integrated firm will increase.
2. The vertically integrated firm has intimidation effect under asymmetric vertical integration; however, the higher the degree of product differentiation and cost-down diminishing return, the less apparently the intimidation effect exists. And this will affect the amount of cost-down investments.
3. When market size is larger, the vertically integrated firm will increase its cost-down investments; whereas the amount of cost-down investments of nonintegrated firm is uncertain.
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