Abstract
This paper studies product line competition in a simple model of a duopoly. There are two identical firms each of whom must choose a line of product qualities and supply quantities for each product in the line. They face consumers who prefer a higher quality product to a lower quality product but differ in how much they are willing to pay for quality. For the firms, a higher quality product is more costly to produce than a lower quality product. The basic question analyzed is the nature of product line competition. Will the firms choose to segment the market — one firm producing a line of lower quality products and the other firm producing a line of higher quality products — or will they interlace their products? Also, how is consumer welfare affected by these alternative ways of product line competition?
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.