Analysis of the Aftermarket Strategy under Vertically Differentiated Market

In this study, we examine the pricing strategy between manufacturers competing in both vertically differentiated main and aftermarket, and numerically analyze the equilibrium solutions to provide meaningful implications for decision-making regarding the aftermarket. To do this, we first use a market model that reflects the fact that, in the aftermarket, some preference may occur for the same brand as the product selected in the main market. We also used a Super game to derive the optimal pricing method between the manufacturers. The results showed that there is a difference in the preferred pricing method between the manufacturer selling high-quality products and the manufacturer selling low-quality products. The low-quality manufacturer prefers to determine the prices of the main product and aftermarket product in an integrated manner rather than independently, but the high-quality manufacturer shows no difference in preference between independent or integrated methods. In addition, it was found that the high-quality manufacturer earns profits from both main and aftermarket, whereas the low-quality manufacturer almost gives up main market profits and focuses on the aftermarket profits.