The different consumption functions of products and product differentiation
AbstractThis paper develops a monopolistic competition model to study the characteristics of products, such as quality improvement and product diversity (function-specialization and individualization), and the division of labor in production. Different from the ordinary economic model, our utility function includes these characteristics and reveals economies of function-specialization and individualization. Moreover, our production function includes these characteristics and reveals economies of vertical specialization and function-specialization. Through comparative static analysis, we find the optimal characteristics and their correlations with population, transaction costs, management efficiency and production technology, etc.
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Bibliographic InfoPaper provided by Econometric Society in its series Econometric Society 2004 Australasian Meetings with number 318.
Date of creation: 11 Aug 2004
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product diversity; quality; theory of the firm; division of labor; monopolistic competition;
Find related papers by JEL classification:
- D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-10-30 (All new papers)
- NEP-COM-2004-10-30 (Industrial Competition)
- NEP-MIC-2004-10-30 (Microeconomics)
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- Gupta, Abhay, 2006. "Technological Progress on Consumption side: Consolidation and Prevalence of Complements," MPRA Paper 8998, University Library of Munich, Germany.
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