IDEAS home Printed from https://ideas.repec.org/a/bla/jindec/v47y1999i4p399-425.html
   My bibliography  Save this article

Product Line Rivalry and Market Segmentation—with an Application to Automobile Optional Engine Pricing

Author

Listed:
  • Frank Verboven

Abstract

This paper addresses the questions whether and when the pricing practices on base products may differ from those of premium products, sold with options or add‐ons. Various alternative models are considered: a monopoly model, a model of brand rivalry with full consumer information and a model of rivalry in which consumers are only well informed about base product prices. Only the brand rivalry model with limited consumer information predicts that premium products have larger percentage markups than base products, provided that brand rivalry is sufficiently intense. Empirical evidence on base and premium product pricing in the automobile market is consistent with the limited information model and inconsistent with the other two models.

Suggested Citation

  • Frank Verboven, 1999. "Product Line Rivalry and Market Segmentation—with an Application to Automobile Optional Engine Pricing," Journal of Industrial Economics, Wiley Blackwell, vol. 47(4), pages 399-425, December.
    • Handle: RePEc:bla:jindec:v:47:y:1999:i:4:p:399-425
    DOI: 10.1111/1467-6451.00106
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/1467-6451.00106
    Download Restriction: no
    File URL: https://libkey.io/10.1111/1467-6451.00106?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    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:47:y:1999:i:4:p:399-425. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0022-1821 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.