Multi-dimensional Product Differentiation and Price Competition
The authors present a framework for analyzi ng the design and pricingof differentiated products. Their approach has two nov el features. Individuals have Cobb-Douglas preferences over multidimensional pro duct characteristics. The distribution of Cobb-Douglas parameters across society is concave: this implies that there is general agreement about which characteri stic mix is most desirable. With these assumptions the authors demonstrate exist ence of a pure strategy price equilibrium for arbitrary pairs of products in two dimensions and also show how raising the dimensionality of the product space pr ovides an advantage to a late entrant in a price- regulated duopoly. Copyright 1986 by Royal Economic Society.
Volume (Year): 38 (1986)
Issue (Month): 0 (Suppl. Nov.)
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