Research ArticleOpen AccessGoogle Scholar indexed
Monopolistic Product Line Competition with <i>Ex Post</i> Consumer Heterogeneity
Department of Food Economics and Marketing, University of Reading, Reading, UK;LEE and Department of Economics, Universitat Jaume I, Castellón, Spain
LEE and Department of Economics, Universitat Jaume I, Castellón, Spain
- 1 Department of Food Economics and Marketing, University of Reading, Reading, UK;LEE and Department of Economics, Universitat Jaume I, Castellón, Spain
- 2 LEE and Department of Economics, Universitat Jaume I, Castellón, Spain
Theoretical Economics Letters·Volume 04 (2014)·Pages 155–165·Published 4 March 2014·DOI10.4236/tel.2014.42023
Copy link · social · email
Abstract
We model monopolistic competition in product lines, assuming that consumer heterogeneity is the result rather than the cause of product variety. Our results contradict some well-known policy implications yielded by the standard monopolistic competition framework.
KeywordsConsumer HeterogeneityProduct DiversityMonopolistic Competition
- Johnson, J.P. and Myatt, D.P. (2003) Multiproduct Quality Competition: Fighting Brands and Product Line Pruning. American Economic Review, 93, 748-774. http://dx.doi.org/10.1257/000282803322157070
- Klemperer, P. and Padilla, A.J. (1997) Do Firms’ Product Lines Include too many Varieties. RAND Journal of Economics, 28, 472-488. http://dx.doi.org/10.2307/2556025
- Kuhn, K.U. and Padilla, A.J. (1996) Product Line Decisions and the Coase Conjecture. RAND Journal of Economics, 27, 391-414. http://dx.doi.org/10.2307/2555933
- De Fraja, G. (1996) Product Line Competition in Vertically Differentiated Markets. International Journal of Industrial Organization, 24, 389-414. http://dx.doi.org/10.1016/0167-7187(95)00483-1
- Judd, K.L. (1985) Credible Spatial Preemption. RAND Journal of Economics, 16, 153-166. http://dx.doi.org/10.2307/2555407
- William, P.P. and Bayus, B.L. (2001) An Empirical Analysis of Firms’ Product Line Decisions. Journal of Marketing Research, 38, 103-118.
- Anderson, S.P., de Palma, A. and Thisse, J.F. (1992) Discrete Choice Theory of Product Differentiation. MIT Press, Cambridge.
- Fujita, M. and Thisse, J.F. (1986) Spatial Competition with a Land Market: Hotelling and von Thunen Unified. Review of Economic Studies, 58, 819-841. http://dx.doi.org/10.2307/2297721
- Lancaster, K.J. (1966) A New Approach to Consumer Theory. Journal of Political Economy, 74,132-157. http://dx.doi.org/10.1086/259131
- Chamberlin, E.H. (1951) Monopolistic Competition Revisited. Economica, 18, 343-362. http://dx.doi.org/10.2307/2549607
- Dixit, A. and Stiglitz, J. (1977) Monopolistic Competition and Optimum Product Diversity. American Economic Review, 67, 297-308.
- Salop, S.C. (1979) Monopolistic Competition with Outside Goods. Bell Journal of Economics, 10,141-156. http://dx.doi.org/10.2307/3003323
- MacLeod, W.B., Norman, G. and Thisse, J.F. (1988) Price Discrimination and Equilibrium in Monopolistic Competition. Journal of Economic Theory, 4, 429-446.
- Tirole, J. (1985) The Theory of Industrial Organization. MIT Press, Cambridge.
- Champsaur, P. and Rochet, J.C. (1998) Multiproduct Duopolists. Econometrica, 57, 533-357. http://dx.doi.org/10.2307/1911051
- Mussa, M. and Rosen, S. (1978) Monopoly and Product Quality. Journal of Economic Theory, 18, 301-317. http://dx.doi.org/10.1016/0022-0531(78)90085-6