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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, adoi:10.17221/13/2015-agricecon fatcat:uxhpc6g7trakvgdtbx4563fwie