Quality Competition: Uniform vs. Non-uniform Consumer Distribution

A two-stage game-theoretical model of duopoly and vertical product differentiation is examined. It is assumed, that there are two firms on some industrial market which produce homogeneous product differentiated by quality. The results of the research of a two-stage model of duopoly are presented. At the first stage of the model companies define quality level and at the second stage they compete in product price. It is supposed that consumers are uniformly distributed. This model was extended to the case when consumers are distributed non-uniformly. The research presents the comparative analysis of results in the case of uniform and non-uniform consumers' distribution.