IDEAS home Printed from https://ideas.repec.org/a/spr/joevec/v19y2009i4p471-486.html
   My bibliography  Save this article

Product variety and price strategy in the ski manufacturing industry

Author

Listed:
  • Nicoletta Corrocher
  • Marco Guerzoni

Abstract

The present paper aims at examining the role of variety in the ski manufacturing industry and its relevance in firms' price setting strategies. In particular, it intends to investigate and empirically test two hypotheses concerning the relation between variety and prices. The first concerns the relationship between product quality/complexity and prices. The second refers to the existence of two kinds of varieties having opposite effects on price formation: market-related variety and production-related variety. We are able to empirically disentangle these two effects, by using variety in service characteristics as a proxy for market-related variety and variety in technical characteristics for production-related variety. Our empirical investigation confirms that prices are positively affected by product complexity and quality and positively affected by variety at the level of service characteristics. This means that a high degree of product variety allows firms to charge a premium price on consumers, who are able to find the product that best meet their needs and are therefore willing to pay a higher price. On the contrary, variety at the level of technical characteristics negatively impact on prices, because in a context where a dominant design emerges and new varieties are not radically different, gains in economies of scale and scope outweigh the cost of the increased flexibility in the equipment required to produce variety. The resulting decrease in marginal costs negatively impinges upon prices.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Nicoletta Corrocher & Marco Guerzoni, 2009. "Product variety and price strategy in the ski manufacturing industry," Journal of Evolutionary Economics, Springer, vol. 19(4), pages 471-486, August.
    • Handle: RePEc:spr:joevec:v:19:y:2009:i:4:p:471-486
    DOI: 10.1007/s00191-009-0145-9
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s00191-009-0145-9
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s00191-009-0145-9?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
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Frenken, Koen & Saviotti, Paolo P. & Trommetter, Michel, 1999. "Variety and niche creation in aircraft, helicopters, motorcycles and microcomputers," Research Policy, Elsevier, vol. 28(5), pages 469-488, June.
    2. 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.
    3. Irmen, Andreas & Thisse, Jacques-Francois, 1998. "Competition in Multi-characteristics Spaces: Hotelling Was Almost Right," Journal of Economic Theory, Elsevier, vol. 78(1), pages 76-102, January.
    4. Avner Shaked & John Sutton, 1982. "Relaxing Price Competition Through Product Differentiation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 49(1), pages 3-13.
    5. Robert C. Feenstra & James A. Levinsohn, 1989. "Distance, Demand, and Oligopoly Pricing," NBER Working Papers 3076, National Bureau of Economic Research, Inc.
    6. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74(2), pages 132-132.
    7. Kelvin Lancaster, 1990. "The Economics of Product Variety: A Survey," Marketing Science, INFORMS, vol. 9(3), pages 189-206.
    8. Marco Guerzoni, 2014. "Product Variety in Automotive Industry," SpringerBriefs in Business, Springer, edition 127, number 978-3-319-01907-9, October.
    9. Saviotti, P. P. & Metcalfe, J. S., 1984. "A theoretical approach to the construction of technological output indicators," Research Policy, Elsevier, vol. 13(3), pages 141-151, June.
    10. Neven, D. & Thisse, J-F., 1989. "On Quality And Variety Competition," LIDAM Discussion Papers CORE 1989020, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    11. B. Curtis Eaton & Richard G. Lipsey, 1979. "Microeconomic Foundations of Central Place Theory," Working Paper 327, Economics Department, Queen's University.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Tommaso Ciarli & Andre' Lorentz & Maria Savona & Marco Valente, 2012. "The role of technology, organisation, and demand in growth and income distribution," LEM Papers Series 2012/06, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    2. Grazia Cecere, 2012. "Economics of soft innovation: a review article," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 21(8), pages 827-835, November.
    3. Nicoletta Corrocher & Marco Guerzoni, 2015. "Post-Entry Product Introduction: Who Explores New Niches?," Industry and Innovation, Taylor & Francis Journals, vol. 22(1), pages 18-36, January.
    4. Frenken, Koen & Pyka, Andreas & Verspagen, Bart & Windrum, Paul, 2010. "Innovation, qualitative change and economic development--Special issue in honour of Pier-Paolo Saviotti," Structural Change and Economic Dynamics, Elsevier, vol. 21(1), pages 1-4, March.
    5. Ciarli, Tommaso & Valente, Marco, 2016. "The complex interactions between economic growth and market concentration in a model of structural change," Structural Change and Economic Dynamics, Elsevier, vol. 38(C), pages 38-54.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nicoletta Corrocher & Marco Guerzoni, 2015. "Post-Entry Product Introduction: Who Explores New Niches?," Industry and Innovation, Taylor & Francis Journals, vol. 22(1), pages 18-36, January.
    2. Pier-Paolo Saviotti & Andreas Pyka, 2004. "Economic Development, Variety and Employment," Revue économique, Presses de Sciences-Po, vol. 55(6), pages 1023-1049.
    3. Phuong Nguyen & Pier-Paolo Saviotti & Michel Trommetter & Bernard Bourgeois, 2005. "Variety and the evolution of refinery processing," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 14(3), pages 469-500, June.
    4. Koen Frenken & Alessandro Nuvolari, 2004. "Entropy statistics as a framework to analyse technological evolution," Chapters, in: John Foster & Werner Hölzl (ed.), Applied Evolutionary Economics and Complex Systems, chapter 5, Edward Elgar Publishing.
    5. Torshizi Mohammad & Fulton Murray E. & Gray Richard S., 2018. "Non-Linear Demand in a Linear Town," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 16(2), pages 1-12, November.
    6. Frenken, Koen & Windrum, Paul, 2000. "Product differentiation and product complexity: A conceptual model and an empirical application to microcomputers," Research Memorandum 019, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    7. P. G. Garella & L. Lambertini, 2008. "Bidimensional quality competition and scope economies," Working Papers 653, Dipartimento Scienze Economiche, Universita' di Bologna.
    8. Frenken, Koen & Leydesdorff, Loet, 2000. "Scaling trajectories in civil aircraft (1913-1997)," Research Policy, Elsevier, vol. 29(3), pages 331-348, March.
    9. Ljubica Nedelkoska, 2010. "Occupations at risk: The task content and job stability," Jena Economics Research Papers 2010-024, Friedrich-Schiller-University Jena.
    10. Bongers, Anelí & Torres, José L., 2014. "Technological change in U.S. jet fighter aircraft," Research Policy, Elsevier, vol. 43(9), pages 1570-1581.
    11. Dos Santos Ferreira, Rodolphe & Thisse, Jacques-Francois, 1996. "Horizontal and vertical differentiation: The Launhardt model," International Journal of Industrial Organization, Elsevier, vol. 14(4), pages 485-506, June.
    12. Mitsuru Igami, 2011. "Does Big Drive Out Small?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 38(1), pages 1-21, January.
    13. Andrea Mangani & Paolo Patelli, 2002. "The Max-Min Principle of Product Differentiation: An Experimental Analysis," LEM Papers Series 2002/05, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    14. Ron Adner & Felipe A. Csaszar & Peter B. Zemsky, 2014. "Positioning on a Multiattribute Landscape," Management Science, INFORMS, vol. 60(11), pages 2794-2815, November.
    15. Paul Windrum & Cecilia Diaz & Despoina Filiou, 2009. "Exploring the relationship between technical and service characteristics," Journal of Evolutionary Economics, Springer, vol. 19(4), pages 567-588, August.
    16. Cecere, Grazia & Corrocher, Nicoletta & Battaglia, Riccardo David, 2015. "Innovation and competition in the smartphone industry: Is there a dominant design?," Telecommunications Policy, Elsevier, vol. 39(3), pages 162-175.
    17. Sanyal, Amal & Patibandla, Murali, 1999. "From Closed to Contestable Markets: Product Differentiation in Indian Durable Consumer Goods Industry," Working Papers 9-1999, Copenhagen Business School, Department of International Economics and Management.
    18. Martinelli, Arianna, 2012. "An emerging paradigm or just another trajectory? Understanding the nature of technological changes using engineering heuristics in the telecommunications switching industry," Research Policy, Elsevier, vol. 41(2), pages 414-429.
    19. Marja Toivonen, 2010. "Different Types of Innovation Processes in Services and their Organisational Implications," Chapters, in: Faïz Gallouj & Faridah Djellal (ed.), The Handbook of Innovation and Services, chapter 10, Edward Elgar Publishing.
    20. Peitz, Martin, 1997. "Models a la Lancaster and a la Hotelling: when they are the same," Economics Letters, Elsevier, vol. 54(2), pages 147-154, February.

    More about this item

    Keywords

    Variety; Product and service characteristics; Ski manufacturing sector; L15; L23; O31;
    All these keywords.

    JEL classification:

    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

    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:spr:joevec:v:19:y:2009:i:4:p:471-486. 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.

    If CitEc recognized a bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    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.