Optimal monopoly market area spanning in multidimensional commodity spaces
A monopoly firm locates in multidimensional product characteristics' space by setting a price that maximizes its profits. The monopoly market area (MMA) it serves strikes the happy medium between lower price and larger MMA, assuming absence of price discrimination, by setting the price at the MMA margins. The MMA takes different shapes, such as hyperspheres or hypercubes, depending on how customers perceive the product distance from their ideal tastes. Commodity space dimensionality, a measure of customer taste elaboration, has a robust effect on optimization: the optimal MMA stretch increases and price decreases with dimensionality, with different customer sensitivity patterns in place. Copyright © 2008 John Wiley & Sons, Ltd.
Volume (Year): 30 (2009)
Issue (Month): 1 ()
|Contact details of provider:|| Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/7976|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Caplin, Andrew S & Nalebuff, Barry J, 1986. "Multi-dimensional Product Differentiation and Price Competition," Oxford Economic Papers, Oxford University Press, vol. 38(0), pages 129-45, Suppl. No.
- Irmen, A. & Thisse, J.-F., .
"Competition in multi-characteristics spaces: Hotelling was almost right,"
CORE Discussion Papers RP
1305, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- 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.
- Irmen, Andreas & Thisse, Jacques-François, 1996. "Competition in Multi-characteristics Spaces: Hotelling was Almost Right," CEPR Discussion Papers 1446, C.E.P.R. Discussion Papers.
- IRMEN, Andreas & THISSE, Jacques-Francois, 1997. "Competition in multi-characteristics spaces: hotelling was almost right," CORE Discussion Papers 1997053, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Andreas IRMEN & Jean-François THISSE, 1996. "Competition in Multi-Characteristics Spaces: Hotelling Was Almost Right," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 9613, Université de Lausanne, Faculté des HEC, DEEP.
- Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132.
- Boyan Jovanovic, 2001. "Fitness and Age: Review of Carroll and Hannan's Demography of Corporations and Industries," Journal of Economic Literature, American Economic Association, vol. 39(1), pages 105-119, March.
When requesting a correction, please mention this item's handle: RePEc:wly:mgtdec:v:30:y:2009:i:1:p:1-14. 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: (Wiley-Blackwell Digital Licensing)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.