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Product Range and Interfirm Competition

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  • Paul W. Dobson
  • Michael Waterson

Abstract

We develop a simple model in which there is both interfirm (or intraproduct) and intrafirm (or interproduct) competition. The purpose is to develop a classificatoy framework in order to understand product‐range or diversification decisions alongside conventional competition. The equilibrium outcomes commonly involve a limited range of the available goods being produced. Deterrence equilibria and other strategic actions are also examined.

Suggested Citation

  • Paul W. Dobson & Michael Waterson, 1996. "Product Range and Interfirm Competition," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 5(3), pages 317-341, September.
    • Handle: RePEc:bla:jemstr:v:5:y:1996:i:3:p:317-341
    DOI: 10.1111/j.1430-9134.1996.00317.x
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    References listed on IDEAS

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    1. Gilbert, Richard J & Matutes, Carmen, 1993. "Product Line Rivalry with Brand Differentiation," Journal of Industrial Economics, Wiley Blackwell, vol. 41(3), pages 223-240, September.
    2. Debra J. Aron, 1993. "Diversificationas a Strategic Preemptive Weapon," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 2(1), pages 41-70, March.
    3. Klemperer, Paul, 1992. "Equilibrium Product Lines: Competing Head-to-Head May Be Less Competitive," American Economic Review, American Economic Association, vol. 82(4), pages 740-755, September.
    4. Drew Fudenberg & Jean Tirole, 1985. "Preemption and Rent Equalization in the Adoption of New Technology," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 52(3), pages 383-401.
    5. Kenneth L. Judd, 1985. "Credible Spatial Preemption," RAND Journal of Economics, The RAND Corporation, vol. 16(2), pages 153-166, Summer.
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    Cited by:

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    2. Rajagopalan, S. & Xia, Nan, 2012. "Product variety, pricing and differentiation in a supply chain," European Journal of Operational Research, Elsevier, vol. 217(1), pages 84-93.
    3. MANEZ, Juan A. & MONER-COLONQUES, Rafael & SEMPERE-MONERRIS, José J. & URBANO, Amparo, 2011. "Price differentials among brands in retail distribution: product quality and service quality," LIDAM Discussion Papers CORE 2011017, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    4. Chisholm, Darlene C. & Norman, George, 2012. "Market access and competition in product lines," International Journal of Industrial Organization, Elsevier, vol. 30(5), pages 429-435.
    5. Manez, J.A. & Waterson, M., 2001. "Multiproduct Firms and Product Differentiation: a Survey," The Warwick Economics Research Paper Series (TWERPS) 594, University of Warwick, Department of Economics.
    6. Juan A. Mañez & Rafael Moner Colonques & Jose J. Sempere-Monerris & Amparo Urbano, 2016. "Brand price differentials in retail distribution: product quality and service quality," Applied Economics, Taylor & Francis Journals, vol. 48(59), pages 5749-5760, December.
    7. Liang Lu, 2017. "A Comparison of the Wholesale Model and the Agency Model in Differentiated Markets," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 51(2), pages 151-172, September.
    8. Schlütter, Frank, 2022. "Managing Seller Conduct in Online Marketplaces and Platform Most-Favored Nation Clauses," LIDAM Discussion Papers CORE 2022026, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    9. Liang Lu, 2015. "A Comparison of the Wholesale Structure and the Agency Structure in Differentiated Markets," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2015-07v2, Centre for Competition Policy, University of East Anglia, Norwich, UK..
    10. José J. Sempere Monerris & Rafael Moner Colonques & Amparo Urbano, 2000. "Product Quality And Distribution Channels," Working Papers. Serie AD 2000-19, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    11. Maruyama, Masayoshi & Zennyo, Yusuke, 2020. "Platform most-favored-customer clauses and investment incentives," International Journal of Industrial Organization, Elsevier, vol. 70(C).
    12. Choné, Philippe & Linnemer, Laurent, 2020. "Linear demand systems for differentiated goods: Overview and user’s guide," International Journal of Industrial Organization, Elsevier, vol. 73(C).
    13. Levent Kutlu & Alper Nakkas, 2018. "Strategic Product Line Choice Under Asymmetric Demand Structure," The Japanese Economic Review, Springer, vol. 69(3), pages 347-359, September.
    14. Volker Nocke & Nicolas Schutz, 2018. "Multiproduct‐Firm Oligopoly: An Aggregative Games Approach," Econometrica, Econometric Society, vol. 86(2), pages 523-557, March.
    15. Saruta, Fuyuki, 2023. "Private labels and platform competition," MPRA Paper 119585, University Library of Munich, Germany.
    16. Noriaki Matsushima & Akira Miyaoka, 2015. "The effects of resale-below-cost laws in the presence of a strategic manufacturer," Quantitative Marketing and Economics (QME), Springer, vol. 13(1), pages 59-91, March.
    17. Li, Shengyu & Luo, Rong, 2020. "Non-Exclusive Dealing with Retailer Differentiation and Market Penetration," International Journal of Industrial Organization, Elsevier, vol. 70(C).
    18. 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.
    19. Cellini, Roberto & Martorana, Marco Ferdinando & Platania, Felicita, 2014. "The multi-product nature of the firm in the arts sector: A case study on ‘Centro Zo’," MPRA Paper 60677, University Library of Munich, Germany.
    20. Simon P. Anderson & André De Palma, 2006. "Market Performance With Multiproduct Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 54(1), pages 95-124, March.
    21. Akio Kawasaki & Tomomichi Mizuno & Kazuhiro Takauchi, 2023. "Downstream new product development and upstream process innovation," Journal of Economics, Springer, vol. 140(3), pages 209-231, December.
    22. Xu, Xu & Coatney, Kalyn T., 2015. "Product market segmentation and output collusion within substitute products," Journal of Economics and Business, Elsevier, vol. 77(C), pages 1-15.
    23. Dobson, Paul W. & Waterson, Michael, 2007. "The competition effects of industry-wide vertical price fixing in bilateral oligopoly," International Journal of Industrial Organization, Elsevier, vol. 25(5), pages 935-962, October.

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