Product Differentiation and Multiproduct Strategies
AbstractThis paper analyzes the price-setting behavior of multiproduct firms in a differentiated product market. While some companies adopt the strategy of independent Product Managers, others take price decisions centrally. We investigate what role the demand structure plays in the optimal organizational arrangement. It results endogenous and characterized in terms of conjectural variations. Show the strategy of coordinated Product Managers is always profitable, in the case of market segmentation. Differently, under market interlacing, the strategy of relying on competitive product managers is profitable when monopolistic competition arises. It may be profitable with oligopolistic competition under some (not very restrictive) assumptions.
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Bibliographic InfoArticle provided by SIPI Spa in its journal Rivista di Politica Economica.
Volume (Year): 98 (2008)
Issue (Month): 3 (May-June)
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product differentiation; multiproduct; division; conjectural variations;
Find related papers by JEL classification:
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
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