IDEAS home Printed from https://ideas.repec.org/a/ris/actuec/v71y1995i1p71-98.html
   My bibliography  Save this article

Différenciation verticale et structure du marché

Author

Listed:
  • Constantatos, Christos

    (Département d’économique, Université Laval)

  • Perrakis, Stylianos

    (Faculté d’administration, Université d’Ottawa)

Abstract

In this paper, we review the literature on vertical product differentiation in connection with its impact on market structure. Two types of vertical differentiation are identified according to whether consumer unanimity over product ranking is maintained at prices reflecting average cost increments necessary to produce higher qualities. If this is the case, the finiteness property prevents market fragmentation by imposing an upper bound on the number of firms even when the fixed cost approaches zero. This situation yields absolute product differentiation advantages to the high quality producers. We focus on the implications of quality choices on entry barriers and market structure under two different assumptions on the nature of the fixed cost. Research on multiproduct firms is also reviewed. L’objectif de ce travail est de faire un survol des progrès récents sur la structure des marchés où se retrouvent plusieurs qualités du même produit. L’accent est mis sur les cas où les consommateurs demeurent unanimes quant au classement des produits, si ces derniers sont offerts à des prix reflétant les augmentations du coût moyen nécessaires pour l’amélioration de leur qualité. Les considérations stratégiques du choix des qualités sous des hypothèses alternatives, quant à la nature du coût fixe ainsi qu’en présence de firmes à plusieurs produits, sont aussi examinées.

Suggested Citation

  • Constantatos, Christos & Perrakis, Stylianos, 1995. "Différenciation verticale et structure du marché," L'Actualité Economique, Société Canadienne de Science Economique, vol. 71(1), pages 71-98, mars.
  • Handle: RePEc:ris:actuec:v:71:y:1995:i:1:p:71-98
    as

    Download full text from publisher

    File URL: http://id.erudit.org/iderudit/602167ar
    Download Restriction: no

    References listed on IDEAS

    as
    1. Constantatos, Christos & Perrakis, Stylianos, 1997. "Vertical differentiation: Entry and market coverage with multiproduct firms," International Journal of Industrial Organization, Elsevier, vol. 16(1), pages 81-103, November.
    2. Gabszewicz, Jean Jaskold, et al, 1981. "International Trade in Differentiated Products," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 22(3), pages 527-534, October.
    3. Stephen W. Salant, 1989. "When is Inducing Self-Selection Suboptimal for a Monopolist?," The Quarterly Journal of Economics, Oxford University Press, vol. 104(2), pages 391-397.
    4. Gabszewicz, Jean Jaskold & Thisse, Jacques-Francois, 1986. "On the Nature of Competition with Differentiated Products," Economic Journal, Royal Economic Society, vol. 96(381), pages 160-172, March.
    5. Sutton, John, 1986. "Vertical Product Differentiation: Some Basic Themes," American Economic Review, American Economic Association, vol. 76(2), pages 393-398, May.
    6. Richard Schmalensee, 1978. "Entry Deterrence in the Ready-to-Eat Breakfast Cereal Industry," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 305-327, Autumn.
    7. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    8. Shaked, Avner & Sutton, John, 1987. "Product Differentiation and Industrial Structure," Journal of Industrial Economics, Wiley Blackwell, vol. 36(2), pages 131-146, December.
    9. Motta, Massimo, 1992. "Sunk Costs and Trade Liberalisation," Economic Journal, Royal Economic Society, vol. 102(412), pages 578-587, May.
    10. Jaskold Gabszewicz, Jean & Shaked, Avner & Sutton, John & Thisse, Jacques-Francois, 1986. "Segmenting the market: The monopolist's optimal product mix," Journal of Economic Theory, Elsevier, vol. 39(2), pages 273-289, August.
    11. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
    12. Avner Shaked & John Sutton, 1982. "Relaxing Price Competition Through Product Differentiation," Review of Economic Studies, Oxford University Press, vol. 49(1), pages 3-13.
    13. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
    14. repec:cor:louvrp:-752 is not listed on IDEAS
    15. Chander, Parkash & Leruth, Luc, 1989. "The optimal product mix for a monopolist in the presence of congestion effects : A model and some results," International Journal of Industrial Organization, Elsevier, vol. 7(4), pages 437-449, December.
    16. Shitovitz, B. & Spiegel, M. & Weber, S., 1989. "'Top of the line' quality as an optimal solution for a multi-quality monopolist," European Economic Review, Elsevier, vol. 33(8), pages 1641-1652, October.
    17. Gabsewicz, Jean J. & Garella, Paolo G., 1987. "Price search and spatial competition," European Economic Review, Elsevier, vol. 31(4), pages 827-842, June.
    18. Phlips,Louis, 1983. "The Economics of Price Discrimination," Cambridge Books, Cambridge University Press, number 9780521283946, April.
    19. Waterson, Michael, 1987. " Recent Developments in the Theory of Natural Monopoly," Journal of Economic Surveys, Wiley Blackwell, vol. 1(1), pages 59-80.
    20. Martinez-Giralt, Xavier, 1989. "On brand proliferation with vertical differentiation," Economics Letters, Elsevier, vol. 30(4), pages 279-286, October.
    21. Cremer, Helmuth & Thisse, Jacques-Francois, 1991. "Location Models of Horizontal Differentiation: A Special Case of Vertical Differentiation Models," Journal of Industrial Economics, Wiley Blackwell, vol. 39(4), pages 383-390, June.
    22. sutton, John, 1989. "Endogenous sunk costs and the structure of advertising intensive industries," European Economic Review, Elsevier, vol. 33(2-3), pages 335-344, March.
    23. Choi, Chong Ju & Shin, Hyun Song, 1992. "A Comment on a Model of Vertical Product Differentiation," Journal of Industrial Economics, Wiley Blackwell, vol. 40(2), pages 229-231, June.
    24. Nancy L. Stokey, 1979. "Intertemporal Price Discrimination," The Quarterly Journal of Economics, Oxford University Press, vol. 93(3), pages 355-371.
    25. Hung, N. M. & Schmitt, Nicolas, 1988. "Quality competition and threat of entry in duopoly," Economics Letters, Elsevier, vol. 27(3), pages 287-292.
    26. Shaked, Avner & Sutton, John, 1983. "Natural Oligopolies," Econometrica, Econometric Society, vol. 51(5), pages 1469-1483, September.
    Full references (including those not matched with items on IDEAS)

    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:ris:actuec:v:71:y:1995:i:1:p:71-98. 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: (Bruce Shearer). General contact details of provider: http://edirc.repec.org/data/scseeea.html .

    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.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with 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.