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Price equilibrium in address models of product differentiation: unit-elastic demand

Author

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  • Martin Peitz

    () (Faculty of Economics and Business Administration, Goethe-University Frankfurt, Uni-PF 77, 60054 Frankfurt, GERMANY)

Abstract

I present a class of address models of product differentiation with unit-elastic individual demand and show the existence of Nash equilibrium in prices under assumptions on utility functions and the taste and income heterogeneity across consumers. This paper complements the work by Caplin and Nalebuff (1991, Econometrica), who analyze unit demand models of product differentiation.

Suggested Citation

  • Martin Peitz, 2002. "Price equilibrium in address models of product differentiation: unit-elastic demand," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 20(4), pages 849-860.
  • Handle: RePEc:spr:joecth:v:20:y:2002:i:4:p:849-860
    Note: Received: December 28, 1998; revised version: September 5, 2001
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    Cited by:

    1. Gu, Yiquan & Wenzel, Tobias, 2009. "A note on the excess entry theorem in spatial models with elastic demand," International Journal of Industrial Organization, Elsevier, vol. 27(5), pages 567-571, September.
    2. Peitz, Martin, 2000. "Aggregation in a Model of Price Competition," Journal of Economic Theory, Elsevier, vol. 90(1), pages 1-38, January.
    3. Margaret Aksoy-Pierson & Gad Allon & Awi Federgruen, 2013. "Price Competition Under Mixed Multinomial Logit Demand Functions," Management Science, INFORMS, vol. 59(8), pages 1817-1835, August.
    4. Alexander Konovalov & Zsolt Sándor, 2010. "On price equilibrium with multi-product firms," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 44(2), pages 271-292, August.

    More about this item

    Keywords

    Imperfect competition; Characteristics approach; Price competition; Income heterogeneity; Variable individual demand.;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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