A model of multiproduct price competition
AbstractStrategic interaction in oligopolistic markets has been extensively studied in the literature. This literature deals mostly with the case of multiple firms which produce a homogeneous good or goods that are perfect substitutes. In this paper we provide a simple model of price competition in a multiproduct oligopoly market. We find that apure strategy equilibrium exists and that the equilibrium consumption sets are efficient since they maximize the total social surplus. If the willingness to pay function of the consumer is convex, the set of equilibrium prices coincides with the core of a related game and the firms extract total industry surplus. If it is concave, the only equilibrium price of a product is its marginal contribution to the consumer's total willingness to pay. If the products are perfect substitutes we obtain the standard Bertrand equilibrium.
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Bibliographic InfoPaper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 1996-07.
Length: 52 pages
Date of creation: Jul 1996
Date of revision:
Publication status: Published by Ivie
Multiproduct oligopolistic competition; efficient consumption sets;
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