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First mover advantage by product proliferation in multiproduct duopoly

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  • Yi‐Ling Cheng
  • Takatoshi Tabuchi

Abstract

This study aims to show that the product proliferation strategy in multi‐product duopoly is first‐mover advantage. We consider simultaneous and Stackelberg variety competitions. A firm producing more varieties charges a higher price, produces larger total quantities, and earns higher total revenue. When firms sequentially choose the masses of varieties and then simultaneously decide prices, the leader produces more varieties and enjoys first‐mover advantage. The masses of varieties can be regarded as strategic substitutes in the same way that quantities are. Finally, the market is likely to provide too few varieties relative to the social optimum.

Suggested Citation

  • Yi‐Ling Cheng & Takatoshi Tabuchi, 2020. "First mover advantage by product proliferation in multiproduct duopoly," International Journal of Economic Theory, The International Society for Economic Theory, vol. 16(1), pages 106-118, March.
    • Handle: RePEc:bla:ijethy:v:16:y:2020:i:1:p:106-118
    DOI: 10.1111/ijet.12242
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    Cited by:

    1. Dong‐Sing He & Imen Tebourbi, 2021. "Measuring the continuation effects of market order entry: A dynamic model," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(3), pages 762-777, April.
    2. Zhu, Qingyun & Dhavale, Dileep G. & Sarkis, Joseph & Wang, Xuan, 2023. "Formalizing organizational product deletion through strategic cross-functional evaluation: A Bayesian analysis approach," International Journal of Production Economics, Elsevier, vol. 262(C).
    3. Xingtang Wang & Leonard F. S. Wang, 2022. "Corporate cannibalism in an oligopolistic market," International Journal of Economic Theory, The International Society for Economic Theory, vol. 18(3), pages 402-417, September.
    4. Rui Hou & Zibin Cui & You Zhao, 2022. "Pricing leadership decisions of competing firms with consumer learning," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(6), pages 2326-2346, September.

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