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The Mainstream Niche

Author

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  • Renaud Foucart

Abstract

Consumption in the time of Internet is characterized by extremely low search costs, leading to increased product diversity (the long tail) and large mainstream products (superstars). In this paper, I show how the mainstream taste can be catered by a niche product, while minority tastes can be mainstream. A competitive market with arbitrarily small search costs supplies a product design corresponding to the mainstream taste at a price that only mainstream buyers are willing to pay. Products corresponding to the taste of the minority are offered at lower price, and bought by several types of buyers.

Suggested Citation

  • Renaud Foucart, 2013. "The Mainstream Niche," Economics Series Working Papers 670, University of Oxford, Department of Economics.
    • Handle: RePEc:oxf:wpaper:670
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    More about this item

    Keywords

    Search; matching; horizontal product diversity;
    All these keywords.

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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