Product lines and price discrimination in the European car market
AbstractIn this paper we consider a model of oligopolistic competition where firms make a two-dimensional product line decision. They choose a location in style space, thus inducing horizontal differentiation, and produce different qualities (a product line) of a given good (vertical differentiation), consumed by a population of customers who differ in their income and preference for style. We prove the existence of a non-cooperative equilibrium and show that, as the degree of competition increases, prices approach marginal cost. The approach is used to show that European car producers seem indeed to use product lines to discriminate across EU countries. Copyright 2002 by Blackwell Publishers Ltd and The Victoria University of Manchester
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Bibliographic InfoPaper provided by ULB -- Universite Libre de Bruxelles in its series ULB Institutional Repository with number 2013/1689.
Date of creation: 2002
Date of revision:
Publication status: Published in: The Manchester School (2002) v.70,p.101-114
Other versions of this item:
- Ginsburgh, Victor & Weber, Shlomo, 2002. "Product Lines and Price Discrimination in the European Car Market," Manchester School, University of Manchester, vol. 70(1), pages 101-14, January.
- GINSBURGH, Victor & WEBER, Shlomo, 1996. "Product Lines and Price Discrimination in the European Car Market," CORE Discussion Papers 1996007, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- GINSBURGH , Victor & WEBER, Shlomo, . "Product lines and price discrimination in the European car market," CORE Discussion Papers RP -1547, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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