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On Stability in Competition: Tying and Horizontal Product Differentiation

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Author Info
Alain Egli ()
Abstract

We combine Hotelling’s model of product differentiation with tie-in sales. A monopolist in one market competes with another firm in a second market. In equilibrium firms choose zero product differentiation. Due to the tying structure no firm can gain the whole market by a small price reduction. A differentiation effect due to tie-in sales leads to this equilibrium stability. Copyright Springer Science+Business Media, LLC 2007

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File URL: http://hdl.handle.net/10.1007/s11151-007-9127-y
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Publisher Info
Article provided by Springer in its journal Review of Industrial Organization.

Volume (Year): 30 (2007)
Issue (Month): 1 (February)
Pages: 29-38
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Handle: RePEc:kap:revind:v:30:y:2007:i:1:p:29-38

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Web page: http://www.springerlink.com/link.asp?id=100336

For technical questions regarding this item, or to correct its listing, contact: (Christopher F. Baum).

Related research
Keywords: Horizontal product differentiation Hotelling Tie-in sales Equilibrium existence D43 L10 L11 L13

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This page was last updated on 2008-8-19.

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