Product differentiation in successive vertical oligopolies
AbstractThis is a successive oligopoly model with two varieties of a final product. Downstream firms choose one variety to sell on a final market. Upstream firms specialize in the production of one input specifically designed for one variety, but they also produce the input for the other variety at an extra cost. We show that as more downstream firms choose one particular variety, more upstream firms specialize in the input specific to that variety, and vice-versa. Multiple equilibria may result, and the softening effect of product differentiation on competition might not be strong enough to induce maximal differentiation.
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Bibliographic InfoArticle provided by Canadian Economics Association in its journal Canadian Journal of Economics.
Volume (Year): 36 (2003)
Issue (Month): 3 (August)
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Other versions of this item:
- BELLEFLAMME, Paul & TOULEMONDE, Eric, . "Product differentiation in successive vertical oligopolies," CORE Discussion Papers RP -1720, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Paul Belleflamme & Eric Toulemonde, 2000. "Product Differentiation in Successive Vertical Oligopolies," Working Papers 421, Queen Mary, University of London, School of Economics and Finance.
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
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