Advanced Search
MyIDEAS: Login to save this paper or follow this series

Fringe firms: Are they better off in a heterogeneous market?

Contents:

Author Info

  • Susanne Wied-Nebbeling
Registered author(s):

    Abstract

    This paper analyzes a market with three firms. One of them is the dominant firm and the two others are fringe firms. The formulation of demand allows a comparison between price competition with heterogeneous and homogeneous products. Because a parameterization is required to assure that market size is the same in both scenarios, no general conclusions can be drawn. But it can be shown that in large markets with relatively inelastic demand for the fringe firms’ products and a cost advantage of the dominant firm, the fringe firms are better off if they produce a heterogeneous product.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://ockenfels.uni-koeln.de/fileadmin/wiso_fak/stawi-ockenfels/pdf/wp_series_download/wp0031.pdf
    Download Restriction: no

    Bibliographic Info

    Paper provided by University of Cologne, Department of Economics in its series Working Paper Series in Economics with number 31.

    as in new window
    Length:
    Date of creation: 26 Jun 2007
    Date of revision:
    Handle: RePEc:kls:series:0031

    Contact details of provider:
    Postal: Albertus Magnus Platz, 50923 Köln
    Phone: 0221 / 470 5607
    Fax: 0221 / 470 5179
    Email:
    Web page: http://www.wiso.uni-koeln.de
    More information through EDIRC

    Related research

    Keywords: dominant firm; competitive fringe; price competition; heterogeneous products;

    Find related papers by JEL classification:

    This paper has been announced in the following NEP Reports:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. B. Curtis Eaton & Roger Ware, 1987. "A Theory of Market Structure with Sequential Entry," RAND Journal of Economics, The RAND Corporation, vol. 18(1), pages 1-16, Spring.
    2. Anderson, Simon P & de Palma, Andre, 1988. "Spatial Price Discrimination with Heterogeneous Products," Review of Economic Studies, Wiley Blackwell, vol. 55(4), pages 573-92, October.
    3. Robert Cherry, 2000. "The Dominant Firm Model Revisited," Review of Industrial Organization, Springer, vol. 16(1), pages 89-95, February.
    4. Schmalensee, Richard., 1980. "Product differentiation advantages of pioneering brands," Working papers 1140-80., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    5. Borenstein, Severin, 1991. "The Dominant-Firm Advantage in Multiproduct Industries: Evidence from the U.S. Airlines," The Quarterly Journal of Economics, MIT Press, vol. 106(4), pages 1237-66, November.
    6. Perloff, Jeffrey M & Salop, Steven, 1984. "Equilibrium with product differentiation," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt4cq0m6s3, Department of Agricultural & Resource Economics, UC Berkeley.
    7. Wang, X. Henry & Zhao, Jingang, 2007. "Welfare reductions from small cost reductions in differentiated oligopoly," International Journal of Industrial Organization, Elsevier, vol. 25(1), pages 173-185, February.
    8. Blank, Larry & Kaserman, David L & Mayo, John W, 1998. "Dominant Firm Pricing with Competitive Entry and Regulation: The Case of IntraLATA Toll," Journal of Regulatory Economics, Springer, vol. 14(1), pages 35-53, July.
    9. R. W. Shaw, 1982. "Product strategy and size of firm in the UK fertilizer market," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 3(4), pages 233-243, December.
    10. Geroski, Paul A. & Jacquemin, Alexis, 1984. "Dominant firms and their alleged decline," International Journal of Industrial Organization, Elsevier, vol. 2(1), pages 1-27, March.
    11. Berck, Peter & Perloff, Jeffrey M., 1988. "The dynamic annihilation of a rational competitive fringe by a low-cost dominant firm," Journal of Economic Dynamics and Control, Elsevier, vol. 12(4), pages 659-678, November.
    12. Francis Bloch, 1995. "Endogenous Structures of Association in Oligopolies," RAND Journal of Economics, The RAND Corporation, vol. 26(3), pages 537-556, Autumn.
    13. Tasnadi, Attila, 2004. "On Forchheimer's model of dominant firm price leadership," Economics Letters, Elsevier, vol. 84(2), pages 275-279, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:kls:series:0031. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Werner).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.