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Market coverage and the nature of product differentiation: a note

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  • WAUTHY, Xavier Y.

Abstract

In this note, we analyze the equilibrium outcomes of pricing games with product differentiation in relation with the extent of market coverage. It is a received idea in the IO literature that the horizontal and vertical models of product differentiation are almost formally equivalent. We show that this idea turns out to be wrong when the full market coverage assumption is relaxed. We then argue that there exist two fundamentally different classes of address-models of differentiation, although their difference is not perfectly captured by the standard horizontal/vertical typology.
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Suggested Citation

  • WAUTHY, Xavier Y., 2010. "Market coverage and the nature of product differentiation: a note," LIDAM Reprints CORE 2212, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvrp:2212
    Note: In : Economics Bulletin, 30(2), 1129-1136, 2010
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    Cited by:

    1. Garella, Paolo G. & Laussel, Didier & Resende, Joana, 2021. "Behavior based price personalization under vertical product differentiation," International Journal of Industrial Organization, Elsevier, vol. 76(C).

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    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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