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Différenciation verticale et structure du marché

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  • Constantatos, Christos

    (Département d’économique, Université Laval)

  • Perrakis, Stylianos

    (Faculté d’administration, Université d’Ottawa)

Abstract

In this paper, we review the literature on vertical product differentiation in connection with its impact on market structure. Two types of vertical differentiation are identified according to whether consumer unanimity over product ranking is maintained at prices reflecting average cost increments necessary to produce higher qualities. If this is the case, the finiteness property prevents market fragmentation by imposing an upper bound on the number of firms even when the fixed cost approaches zero. This situation yields absolute product differentiation advantages to the high quality producers. We focus on the implications of quality choices on entry barriers and market structure under two different assumptions on the nature of the fixed cost. Research on multiproduct firms is also reviewed. L’objectif de ce travail est de faire un survol des progrès récents sur la structure des marchés où se retrouvent plusieurs qualités du même produit. L’accent est mis sur les cas où les consommateurs demeurent unanimes quant au classement des produits, si ces derniers sont offerts à des prix reflétant les augmentations du coût moyen nécessaires pour l’amélioration de leur qualité. Les considérations stratégiques du choix des qualités sous des hypothèses alternatives, quant à la nature du coût fixe ainsi qu’en présence de firmes à plusieurs produits, sont aussi examinées.

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Bibliographic Info

Article provided by Société Canadienne de Science Economique in its journal L'Actualité économique.

Volume (Year): 71 (1995)
Issue (Month): 1 (mars)
Pages: 71-98

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Handle: RePEc:ris:actuec:v:71:y:1995:i:1:p:71-98

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  1. Constantatos, Christos & Perrakis, Stylianos, 1997. "Vertical differentiation: Entry and market coverage with multiproduct firms," International Journal of Industrial Organization, Elsevier, vol. 16(1), pages 81-103, November.
  2. Shaked, Avner & Sutton, John, 1987. "Product Differentiation and Industrial Structure," Journal of Industrial Economics, Wiley Blackwell, vol. 36(2), pages 131-46, December.
  3. Choi, Chong Ju & Shin, Hyun Song, 1992. "A Comment on a Model of Vertical Product Differentiation," Journal of Industrial Economics, Wiley Blackwell, vol. 40(2), pages 229-31, June.
  4. Jaskold Gabszewicz, Jean & Shaked, Avner & Sutton, John & Thisse, Jacques-Francois, 1986. "Segmenting the market: The monopolist's optimal product mix," Journal of Economic Theory, Elsevier, vol. 39(2), pages 273-289, August.
  5. Stokey, Nancy L, 1979. "Intertemporal Price Discrimination," The Quarterly Journal of Economics, MIT Press, vol. 93(3), pages 355-71, August.
  6. Gabszewicz, Jean Jaskold, et al, 1981. "International Trade in Differentiated Products," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 22(3), pages 527-34, October.
  7. Shaked, Avner & Sutton, John, 1983. "Natural Oligopolies," Econometrica, Econometric Society, vol. 51(5), pages 1469-83, September.
  8. Salant, Stephen W, 1989. "When Is Inducing Self-selection Suboptimal for a Monopolist?," The Quarterly Journal of Economics, MIT Press, vol. 104(2), pages 391-97, May.
  9. GABSZEWICZ, Jean J. & THISSE, Jacques-François, . "On the nature of competition with differentiated products," CORE Discussion Papers RP -685, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  10. Chander, Parkash & Leruth, Luc., 1988. "The Optimal Product-Mix for a Monopolist in the Presence of Congestion Effect: A Model and Some Results," Working Papers 673, California Institute of Technology, Division of the Humanities and Social Sciences.
  11. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
  12. GABSZEWICZ, Jean J. & GARELLA, Paolo G., . "Price search and spatial competition," CORE Discussion Papers RP -752, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  13. Dixit, Avinash K & Stiglitz, Joseph E, 1975. "Monopolistic Competition and Optimum Product Diversity," The Warwick Economics Research Paper Series (TWERPS) 64, University of Warwick, Department of Economics.
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  15. sutton, John, 1989. "Endogenous sunk costs and the structure of advertising intensive industries," European Economic Review, Elsevier, vol. 33(2-3), pages 335-344, March.
  16. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
  17. Martinez-Giralt, Xavier, 1989. "On brand proliferation with vertical differentiation," Economics Letters, Elsevier, vol. 30(4), pages 279-286, October.
  18. Cremer, Helmuth & Thisse, Jacques-Francois, 1991. "Location Models of Horizontal Differentiation: A Special Case of Vertical Differentiation Models," Journal of Industrial Economics, Wiley Blackwell, vol. 39(4), pages 383-90, June.
  19. Shitovitz, B. & Spiegel, M. & Weber, S., 1989. "'Top of the line' quality as an optimal solution for a multi-quality monopolist," European Economic Review, Elsevier, vol. 33(8), pages 1641-1652, October.
  20. Hung, N. M. & Schmitt, Nicolas, 1988. "Quality competition and threat of entry in duopoly," Economics Letters, Elsevier, vol. 27(3), pages 287-292.
  21. Waterson, Michael, 1987. " Recent Developments in the Theory of Natural Monopoly," Journal of Economic Surveys, Wiley Blackwell, vol. 1(1), pages 59-80.
  22. Shaked, Avner & Sutton, John, 1982. "Relaxing Price Competition through Product Differentiation," Review of Economic Studies, Wiley Blackwell, vol. 49(1), pages 3-13, January.
  23. Richard Schmalensee, 1978. "Entry Deterrence in the Ready-to-Eat Breakfast Cereal Industry," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 305-327, Autumn.
  24. Motta, Massimo, 1992. "Sunk Costs and Trade Liberalisation," Economic Journal, Royal Economic Society, vol. 102(412), pages 578-87, May.
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