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Product Differentiation and Multiproduct Strategies

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  • Marco Di Cintio

    () (Università del Salento, Lecce)

Abstract

This paper analyzes the price-setting behavior of multiproduct firms in a differentiated product market. While some companies adopt the strategy of independent Product Managers, others take price decisions centrally. We investigate what role the demand structure plays in the optimal organizational arrangement. It results endogenous and characterized in terms of conjectural variations. Show the strategy of coordinated Product Managers is always profitable, in the case of market segmentation. Differently, under market interlacing, the strategy of relying on competitive product managers is profitable when monopolistic competition arises. It may be profitable with oligopolistic competition under some (not very restrictive) assumptions.

Suggested Citation

  • Marco Di Cintio, 2008. "Product Differentiation and Multiproduct Strategies," Rivista di Politica Economica, SIPI Spa, vol. 98(3), pages 89-124, May-June.
  • Handle: RePEc:rpo:ripoec:v:98:y:2008:i:3:p:89-124
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    More about this item

    Keywords

    product differentiation; multiproduct; division; conjectural variations;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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