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Versioning Goods and Joint Purchase: Substitution and Complementarity Strategies

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  • Francisco Martinez

    () (Department of Economic Theory and Economic History, University of Granada.)

Abstract

We analyze the monopolist’s decision about how to design different versions of a good, i.e. whether to make them substitutes or complements, when consumers can buy them simultaneously. In this context, we find that versioning goods as substitutes or complements may be optimal for the monopolist, and the final result depends on the degree of concavity and convexity of the cost function.

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File URL: http://www.ugr.es/~teoriahe/RePEc/gra/wpaper/thepapers07_06.pdf
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Bibliographic Info

Paper provided by Department of Economic Theory and Economic History of the University of Granada. in its series ThE Papers with number 07/06.

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Length: 12 pages
Date of creation: 31 Dec 2007
Date of revision:
Handle: RePEc:gra:wpaper:07/06

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Related research

Keywords: Versioning Goods; Joint Purchase Option; Substitutes; Complementarity; Price Discrimination; Market Segmentation.;

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  1. Stokey, Nancy L, 1979. "Intertemporal Price Discrimination," The Quarterly Journal of Economics, MIT Press, vol. 93(3), pages 355-71, August.
  2. Motta, Massimo, 1993. "Endogenous Quality Choice: Price vs. Quantity Competition," Journal of Industrial Economics, Wiley Blackwell, vol. 41(2), pages 113-31, June.
  3. Jean J. Gabszewicz & Xavier Y. Wauthy, 2003. "The option of joint purchase in vertically differentiated markets," Economic Theory, Springer, vol. 22(4), pages 817-829, November.
  4. Gabszewicz, Jean J. & Laussel, Dider & Sonnac, Nathalie, 2001. "Press advertising and the ascent of the 'Pensee Unique'," European Economic Review, Elsevier, vol. 45(4-6), pages 641-651, May.
  5. Gabszewicz, Jean & Sonnac, Nathalie & Wauthy, Xavier, 2001. "On price competition with complementary goods," Economics Letters, Elsevier, vol. 70(3), pages 431-437, March.
  6. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
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