IDEAS home Printed from https://ideas.repec.org/a/bla/jindec/v38y1990i4p397-415.html
   My bibliography  Save this article

The Logit Model of Monopolistic Competition: Brand Diversity

Author

Listed:
  • Besanko, David
  • Perry, Martin K
  • Spady, Richard H

Abstract

One of the important issues in the literature on monopolistic competition concerns whether the free entry equilibrium will provide sufficient variety of differentiated brands. This paper examines variety issue using the logit choice model to capture brand differentiation. The consumption value of each brand is drawn from the extreme value distribution, and the consumer then purchases the brand with the highest value. With the resulting demand structure, the authors' find that monopolistic competition results in two few firms and, thus, too few brands from the viewpoint of consumers. This result supports the findings of other models with symmetrically differentiated brands. Copyright 1990 by Blackwell Publishing Ltd.

Suggested Citation

  • Besanko, David & Perry, Martin K & Spady, Richard H, 1990. "The Logit Model of Monopolistic Competition: Brand Diversity," Journal of Industrial Economics, Wiley Blackwell, vol. 38(4), pages 397-415, June.
  • Handle: RePEc:bla:jindec:v:38:y:1990:i:4:p:397-415
    as

    Download full text from publisher

    File URL: http://links.jstor.org/sici?sici=0022-1821%28199006%2938%3A4%3C397%3ATLMOMC%3E2.0.CO%3B2-G&origin=bc
    File Function: full text
    Download Restriction: Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ramon Caminal & Lluís M. Granero, 2012. "Multi‐product Firms and Product Variety," Economica, London School of Economics and Political Science, vol. 79(314), pages 303-328, April.
    2. Walter Beckert, 2015. "Choice in the Presence of Experts," Birkbeck Working Papers in Economics and Finance 1503, Birkbeck, Department of Economics, Mathematics & Statistics.
    3. Christopher Coyne & Justin Isaacs & Jeremy Schwartz, 2010. "Entrepreneurship and the taste for discrimination," Journal of Evolutionary Economics, Springer, vol. 20(4), pages 609-627, August.
    4. Walter Beckert & Kate Collyer, 2016. "Choice in the presence of experts: the role of general practitioners in patients' hospital choice," IFS Working Papers W16/21, Institute for Fiscal Studies.
    5. Mesak, Hani I. & Bari, Abdullahel & Blackstock, Rob, 2016. "On the robustness and strategic implications of a parsimonious advertising – inventory competitive model with extensions to pricing competition," International Journal of Production Economics, Elsevier, vol. 180(C), pages 38-47.
    6. Ivaldi, Marc & Jullien, Bruno & Rey, Patrick & Seabright, Paul & Tirole, Jean, 2003. "The Economics of Unilateral Effects," IDEI Working Papers 222, Institut d'Économie Industrielle (IDEI), Toulouse.
    7. Weintraub, Gabriel Y. & Benkard, C. Lanier & Van Roy, Benjamin, 2011. "Industry dynamics: Foundations for models with an infinite number of firms," Journal of Economic Theory, Elsevier, vol. 146(5), pages 1965-1994, September.
    8. C. Robert Clark, 2003. "Advertising Restrictions and Competition in the Children's Breakfast Cereal Industry / Restrictions et compétition publicitaire dans l'industrie des céréales pour enfants," CIRANO Working Papers 2003s-30, CIRANO.
    9. Nicholas Economides & Steven S. Wildman, 1995. "Monopolistic Competition with Two-Part Tariffs," Working Papers 95-10, New York University, Leonard N. Stern School of Business, Department of Economics.
    10. Anderson, Simon P & de Palma, Andre, 1992. "Multiproduct Firms: A Nested Logit Approach," Journal of Industrial Economics, Wiley Blackwell, vol. 40(3), pages 261-276, September.
    11. repec:eee:mateco:v:74:y:2018:i:c:p:56-61 is not listed on IDEAS
    12. Llanes, Gastón & de Elejalde, Ramiro, 2013. "Industry equilibrium with open-source and proprietary firms," International Journal of Industrial Organization, Elsevier, vol. 31(1), pages 36-49.
    13. Adlakha, Sachin & Johari, Ramesh & Weintraub, Gabriel Y., 2015. "Equilibria of dynamic games with many players: Existence, approximation, and market structure," Journal of Economic Theory, Elsevier, vol. 156(C), pages 269-316.
    14. Vivek Farias & Bar Ifrach & Gabriel Weintraub, 2012. "A Framework for Dynamic Oligopoly in Concentrated Industries," 2012 Meeting Papers 505, Society for Economic Dynamics.
    15. Suman Basuroy & Dung Nguyen, 1998. "Multinomial Logit Market Share Models: Equilibrium Characteristics and Strategic Implications," Management Science, INFORMS, vol. 44(10), pages 1396-1408, October.
    16. Yaroslav Kryukov & Ulrich Doraszelski & David Besanko, 2015. "Is Dynamic Competition Socially Beneficial? The Case of Price as Investment," 2015 Meeting Papers 296, Society for Economic Dynamics.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jindec:v:38:y:1990:i:4:p:397-415. 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: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0022-1821 .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.