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Product Line Rivalry: A Further Analysis

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Abstract

In this paper we conduct a further analysis on the Brander and Eaton (1984) model of product line rivalry by examining two cases that have not been studied previously. The common feature shared by these two cases is asymmetry between firms. Specifically, we examine situations where either a) the firms have different marginal costs, or b) they choose quantity sequentially. Our analysis shows that each of these asymmetries between firms can lead to market interlacing in equilibrium.

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  • Zhihong Chen & Zhiqi Chen, 2011. "Product Line Rivalry: A Further Analysis," Carleton Economic Papers 11-04, Carleton University, Department of Economics.
    • Handle: RePEc:car:carecp:11-04
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    1. Janssen, Maarten C.W. & Karamychev, Vladimir A. & van Reeven, Peran, 2005. "Multi-store competition: Market segmentation or interlacing?," Regional Science and Urban Economics, Elsevier, vol. 35(6), pages 700-714, November.
    2. Klemperer, Paul, 1992. "Equilibrium Product Lines: Competing Head-to-Head May Be Less Competitive," American Economic Review, American Economic Association, vol. 82(4), pages 740-755, September.
    3. Martinez-Giralt, Xavier & Neven, Damien J, 1988. "Can Price Competition Dominate Market Segmentation?," Journal of Industrial Economics, Wiley Blackwell, vol. 36(4), pages 431-442, June.
    4. Bhatt, Swati, 1987. "Strategic Product Choice in Differentiated Markets," Journal of Industrial Economics, Wiley Blackwell, vol. 36(2), pages 207-216, December.
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    More about this item

    Keywords

    Product Line Rivalry; Market Interlacing; Market Segmentation;
    All these keywords.

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

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