We study the time evolution of a vertically and horizontally differentiated oligopolistic industry, where firms compete in quantity and are divided into groups producing one variety of a substitutable product. We assume that firms can periodically revise their decision about which variety to produce. For a general oligopoly with two varieties, we characterize the industry composition in the steady state as a function of the parameter values. Our results are applied to the case of the sustainable wine industry.
Published March 2019 , 32 pages