nach oben

Erschienen in:

2012 | OriginalPaper | Buchkapitel

7. Product Differentiation

verfasst von : Victor J. Tremblay, Carol Horton Tremblay

Erschienen in: New Perspectives on Industrial Organization

Verlag: Springer New York

Einloggen

Aktivieren Sie unsere intelligente Suche, um passende Fachinhalte oder Patente zu finden.

search-config

KI-gestützte Suche

Aus

Abstract

In our discussion of monopolistic competition in the previous chapter, competing firms produced differentiated products. This occurs when firms sell products that vary slightly from one brand to another. Two loaves of wheat bread may be the same in every way except that one is thin sliced and the other is thick sliced. Although a Mazda Miata and Porsche 911 are both sports cars, they differ in terms of style, power, and fuel economy. This is in contrast to perfectly competitive markets, where products are perfectly homogeneous.

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

über 102.000 Bücher
über 537 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Finance + Banking
Management + Führung
Marketing + Vertrieb
Maschinenbau + Werkstoffe
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 340 Zeitschriften

aus folgenden Fachgebieten:

Bauwesen + Immobilien
Business IT + Informatik
Finance + Banking
Management + Führung
Marketing + Vertrieb
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Vorheriges Kapitel Monopoly and Monopolistic Competition

Nächstes Kapitel Market Structure, Industry Concentration, and Barriers to Entry

For a review of the literature and practical concerns with the law of one price, see Lamont and Thaler (2003).

This information is available at http://www.edmunds.com.

Of course, they have different packaging and are marketed in different ways. These issues will be discussed in later chapters.

Thus, it is sometimes called a representative consumer model. Dixit (1979) derives this demand system from the representative consumer’s utility function U(q ₁, q ₂) = α ₁ q ₁ + α ₂ q ₂ − (β ₁ q ₁ ² + β ₂ q ₂ ² + 2γq ₁ q ₂)/2. In our specification, we let a = α ₁ = α ₂, β ₁ = β ₂ = 1, and d = γ.

For a discussion of a circular city model as described in Fig. 7.1, see Salop (1979) and Tirole (1988).

In other words, consumers are making discrete purchases, buying 0 or 1 unit at a time. This is common with durable goods, for example, where most consumers buy just one house, automobile, or microwave oven at a time.

This is derived as follows. From above, d _m1 = θ _m and d _m2 = 1 − θ _m. Thus, U _m1 = s − p ₁ − td _m1 = s − p ₁− tθ _m and U _m2 = s − p ₂ − t(1−θ _m). Setting U _m1 = U _m2 and solving for θ _m leads to the following result: θ _m = (t − p ₁ + p ₂)/(2t).

In many applications, N is normalized to 1 for simplicity.

When this happens, consumers may decide to buy a different good. For example, a substantial increase in the price of cookies will cause some consumers to switch to ice cream, which is called an outside good.

That is, if the distance between firms 1 and 2 is 1/n, and the distance between firm 1 and consumer x is distance x, then the distance between firm 2 and consumer x is (1/n − x). We use x instead of θ _x to simplify the notation.

For example, the strength of preference for quality could be a positive function of consumer income, with richer consumers having a stronger preference (i.e., willingness and ability to pay) for quality.

If φ _L < x, the market would be uncovered because consumers with preferences within the x−φ _L interval would opt out of the market (i.e., they would buy neither brand 1 nor brand 2).

There are exceptions. In our discussion of damaged goods in Chap. 14, we show that it can be profitable for a multiproduct firm to produce and sell both a high and a low quality brands even though the low quality brand is more expensive to produce than the high quality brand.

Nelson (1970, 1974) identified search and experience goods, and Darby and Karni (1973) identified credence goods.

Bowley AL (1924) Mathematical groundwork of economics: an introductory treatise. Oxford University Press, Oxford

Chamberlin E (1933) The theory of monopolistic competition. Harvard University Press, Cambridge

Dixit A (1979) A model of duopoly suggesting a theory of entry. Bell J Econ 10(1):20–32CrossRef

Hotelling H (1929) Stability in competition. Econ J 39:41–57CrossRef

Lamont OA, Thaler RH (2003) Anomalies: the law of one price in financial markets. J Econ Perspect 17(4):191–202, FallCrossRef

Lancaster KJ (1966) A new approach to consumer theory. J Polit Econ 74:132–157CrossRef

Nelson P (1970) Information and consumer behavior. J Polit Econ 78:311–329CrossRef

Nelson P (1974) Advertising as information. J Polit Econ 82:729–754CrossRef

Salop S (1979) Monopolistic competition with outside goods. Bell J Econ 10:141–156CrossRef

Tirole J (1988) The theory of industrial organization. MIT Press, Cambridge, MA

Titel: Product Differentiation
verfasst von: Victor J. Tremblay
Carol Horton Tremblay
Verlag: Springer New York
Buch: New Perspectives on Industrial Organization
Print ISBN: 978-1-4614-3240-1

Electronic ISBN: 978-1-4614-3241-8

Copyright-Jahr: 2012
DOI: https://doi.org/10.1007/978-1-4614-3241-8_7

Springer Professional

Abstract

Bitte loggen Sie sich ein, um Zugang zu Ihrer Lizenz zu erhalten.

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Springer Professional "Wirtschaft"

Premium Partner