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Product Differentiation in a Market with Endogenous Sequential Entry

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Author Info
W.J. Lane
Abstract

This article constructs a descriptive model of a market with differentiated consumers and products in which both prices and product specifications are endogenous and in which entry is endogenous and sequential. We show that there is a unique equilibrium in product specifications and prices in which firms will charge different prices and produce products with different characteristics to meet the diverse preferences of consumers. Fixed costs together with free sequential entry imply that there are product choice strategies by which existing firms can effectively deter entry and thus secure positive profits.

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File URL: http://links.jstor.org/sici?sici=0361-915X%28198021%2911%3A1%3C237%3APDIAMW%3E2.0.CO%3B2-B&origin=repec
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Publisher Info
Article provided by The RAND Corporation in its journal Bell Journal of Economics.

Volume (Year): 11 (1980)
Issue (Month): 1 (Spring)
Pages: 237-260
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Handle: RePEc:rje:bellje:v:11:y:1980:i:spring:p:237-260

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  1. Urban, Glen L. & Kalyanaram, Gurumurthy., 1990. "Dynamic effects of the order of entry on market share trial penetration, and repeat purchases for frequently purchased consumer goods," Working papers 3207-90., Massachusetts Institute of Technology (MIT), Sloan School of Management. [Downloadable!]
  2. Jean-Marc Bonnisseau & Rim Lahmandi-Ayed, 2006. "Vertical Differentiation: Multiproduct Strategy to Face Entry?," The B.E. Journal of Theoretical Economics, Berkeley Electronic Press, vol. 0(1). [Downloadable!]
  3. Yiannaka, Amalia & Fulton, Murray, 2001. "Strategic Patent Breadth For Drastic Product Innovations," 2001 Annual meeting, August 5-8, Chicago, IL 20500, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  4. Amalia Yiannaka & Murray Fulton, 2003. "Strategic Patent Breadth And Entry Deterrence With Drastic Product Innovations," Levine's Bibliography 666156000000000362, UCLA Department of Economics. [Downloadable!]
  5. David Encaoua, 1989. "Différenciation des produits et structures de marché: un tour d'horizon," Annales d'Economie et de Statistique, ADRES, issue 15-16, pages 04, Juillet-D. [Downloadable!]
  6. Shulamit Kahn, 1991. "Does Employer Monopsony Power Increase Occupational Accidents? The Case of Kentucky Coal Mines," NBER Working Papers 3897, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  7. Richard Gilbert & Carmen Matutes, 1990. "Multiproduct Competition," Annales d'Economie et de Statistique, ADRES, issue 18, pages 08, Avril-Jui. [Downloadable!]
  8. Andrew Caplin & Barry Nalebuff, 1990. "Aggregation and Imperfect Competition: On the Existence of Equilibrium," Cowles Foundation Discussion Papers 937, Cowles Foundation, Yale University. [Downloadable!]
    Other versions:
  9. Hauser, John R., 1983. "Price theory and the role of marketing science," Working papers 1403-83., Massachusetts Institute of Technology (MIT), Sloan School of Management. [Downloadable!]
  10. Mason, Robin & Weeds, Helen, 2001. "Irreversible Investment with Strategic Interactions," CEPR Discussion Papers 3013, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  11. S. Baranzoni & P. Bianchi & L. Lambertini, 2000. "Market Structure," Working Papers 368, Dipartimento Scienze Economiche, Universita' di Bologna. [Downloadable!]
  12. Yiannaka, Amalia & Fulton, Murray, 2002. "Patent Breadth As An Entry Deterrent: The Case Of Vertically Differentiated Product Innovations," 2002 Annual meeting, July 28-31, Long Beach, CA 19624, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  13. Nicholas Economides & Joel Steckel, . "The Max-Min Principle of Product Differentiation," Networks, Compatibility 94-16, Economics of Networks. [Downloadable!]
    Other versions:
  14. Riemer, Hila & Mallik, Suman & Sudharshan, Devanathan, 2002. "Market Shares Follow the Zipf Distribution," Working Papers 02-0125, University of Illinois at Urbana-Champaign, College of Business. [Downloadable!]
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