Abstract: With the improvement of consumption level, the demand of differential product is growing. In order to improve enterprises' profits, they provide differentiated products of their quality to meet consumer's demands. Abounding differentiated products would be bound to induce product quality information asymmetry problem between enterprises and consumers. This will make enterprises use false information to improve corporate profits. Therefore, this paper constructs a pricing model of differentiated products of their quality in duopoly market based on Bertrand game model, and then analyzes the two enterprises' profits under different information strategy. The results show that the Nash equilibrium for the both enterprises is using false information in duopoly market. On the basis of the results a reasonable solution is provided to avoid the false information from the contract theory. Research finds that enterprises will not get a higher profit using false information under the restriction of punishment. Nevertheless, whether the revenue of the consumers is increased or not, it depends on the degree of penalty. Finally the validity of the model is confirmed through analysis of examples. This paper combines the quality differentiation with asymmetric information, deepen the differentiated product pricing research, and broaden the research scope of information asymmetry.

Key words: information asymmetry, false information, Bertrand game, the circumvention of false information