Entry into the Low Quality Goods Market by the Manufacturer of High Quality Brand (Game Theory Approach)

Today, one of the most important threats to manufacturers of high quality signs is the presence of manufacturers who offer the same signs with low quality and lower price. In this article, two main manufacturing companies are considered, one is the main manufacturing company and produces both types of signs (both high quality and low quality) and the other company is only producing low quality signs. Then the game between these two companies is designed and the consequences of this game are reviewed and strategies are provided for the producers of high quality and low quality signs in the field of price. The results show a direct relationship between the price of a low quality token and the quality of a high quality token. There is also a direct relationship between price and quality of high quality tokens. On the other hand, the relationship between the quality of the low quality production mark and the production costs of the high quality mark is inverse. Also, the relationship between low quality production mark and unfavorableness due to the purchase of low quality goods (λ) is inverse. One of the most important results obtained in this research can be said that the welfare effects of the producer of high quality signs will increase if they enter the market of low quality signs.