Product Lines and Price Discrimination in the European Car Market
AbstractIn this paper we consider a model of oligopolistic competition where firms make a two-dimensional product line decision. They choose a location in style space, thus inducing horizontal differentiation, and produce different qualities (a product line) of a given good (vertical differentiation), consumed by a population of customers who differ in their income and preference for style. We prove the existence of a non-cooperative equilibrium and show that, as the degree of competition increases, prices approach marginal cost. The approach is used to show that European car producers seem indeed to use product lines to discriminate across EU countries. Copyright 2002 by Blackwell Publishers Ltd and The Victoria University of Manchester
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Bibliographic InfoArticle provided by University of Manchester in its journal Manchester School.
Volume (Year): 70 (2002)
Issue (Month): 1 (January)
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Other versions of this item:
- GINSBURGH, Victor & WEBER, Shlomo, 1996. "Product Lines and Price Discrimination in the European Car Market," CORE Discussion Papers 1996007, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Victor Ginsburgh & Shlomo Weber, 2002. "Product lines and price discrimination in the European car market," ULB Institutional Repository 2013/1689, ULB -- Universite Libre de Bruxelles.
- GINSBURGH , Victor & WEBER, Shlomo, . "Product lines and price discrimination in the European car market," CORE Discussion Papers RP -1547, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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