Asymmetric competition in food industry with product substitutability

Yang Yong-cong, Nie Pu-yan
2016 Agricultural Economics (AGRICECON)  
Th e paper analyses the eff ects of asymmetric competition on food industry with product substitutability by establishing a two-stage dynamic game model. Th e equilibrium is captured under both the Cournot competition and Stackelberg competition. Firstly, under the Cournot competition, lower costs yield a higher quality, more outputs and higher profi ts. Secondly, the cost diff erence increases the quality diff erence, the market size diff erence and the profi t diff erence. Th irdly, a
more » ... Th irdly, a U-shaped relationship between the product substitutability and the food quality exists. Finally, compared with the case under the Cournot competition, the food security is signifi cantly reduced with the lower quality and less outputs in the case under the Stackelberg competition.
doi:10.17221/13/2015-agricecon fatcat:uxhpc6g7trakvgdtbx4563fwie