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Customization: Ideal Varieties, Product Uniqueness and Price Competition

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Abstract

We study customization in the Hotelling model with two firms. In addition to providing ideal varieties, the perceived uniqueness of a customized product contributes independently to consumer utility. We show that only when consumer preferences for uniqueness are high customization occurs in equilibrium.

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File URL: http://economics.missouri.edu/working-papers/2009/WP0904_loginova.pdf
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Bibliographic Info

Paper provided by Department of Economics, University of Missouri in its series Working Papers with number 0904.

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Length: 9
Date of creation: 31 Jan 2009
Date of revision:
Handle: RePEc:umc:wpaper:0904

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Keywords: customization; product di fferentiation; product uniqueness; price competition.;

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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.:
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  1. Alexei Alexandrov, 2006. "Fat Products," Discussion Papers 1435, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  2. Nan Xia & S. Rajagopalan, 2009. "Standard vs. Custom Products: Variety, Lead Time, and Price Competition," Marketing Science, INFORMS, vol. 28(5), pages 887-900, 09-10.
  3. Rajiv Dewan & Bing Jing & Abraham Seidmann, 2003. "Product Customization and Price Competition on the Internet," Management Science, INFORMS, vol. 49(8), pages 1055-1070, August.
  4. Oksana Loginova & X. H. Wang, 2009. "Customization with Vertically Diff erentiated Products," Working Papers 0903, Department of Economics, University of Missouri.
  5. Bernhardt, Dan & Liu, Qihong & Serfes, Konstantinos, 2007. "Product customization," European Economic Review, Elsevier, vol. 51(6), pages 1396-1422, August.
  6. Niladri B. Syam & Nanda Kumar, 2006. "On Customized Goods, Standard Goods, and Competition," Marketing Science, INFORMS, vol. 25(5), pages 525-537, September.
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