Strategic Product Choice and Niche Markets
AbstractThis paper presents a model of strategic product choice when consumer preferences combine features of both horizontal and vertical product differentiation. Consumers disagree on what amount of a "special" characteristic makes for a better product, but those who prefer more of this attribute are willing to pay more for it. Within this demand structure, I examine the advantages of first-mover firms. I find that such firms typically do best in markets where the maximum degree of product differentiation is limited by preferences rather than technology. These are "niche markets." Follower firms do better in markets in which the range of preferences is broad relative to the span of feasible goods. Copyright 1992 by MIT Press.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Journal of Economics & Management Strategy.
Volume (Year): 1 (1992)
Issue (Month): 2 (Summer)
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Web page: http://www.kellogg.northwestern.edu/research/journals/JEMS/
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- Georg Götz, 2002. "Spatial Competition, Sequential Entry, and Technology choice," Vienna Economics Papers 0215, University of Vienna, Department of Economics.
- Tisdell, Clement A. & Seidl, Irmi, 2001.
"Niches and Economic Competition: Implications for Economic Efficiency, Growth and Diversity,"
Economic Theory, Applications and Issues Working Papers
90508, University of Queensland, School of Economics.
- Tisdell, Clem & Seidl, Irmi, 2004. "Niches and economic competition: implications for economic efficiency, growth and diversity," Structural Change and Economic Dynamics, Elsevier, vol. 15(2), pages 119-135, June.
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