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Monopolistic Competition, Multiproduct Firms and Optimum Product Diversity

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  • Ottaviano, G.I.P.
  • Thisse, J.-F.

Abstract

This paper tackles the issue of optimum product diversity in an impoerfeclty competitive market with small or large firms. First, it develops a quadratic utility model of monopolistic competition with horizontal product differentiation which avoids some of the main pitfalls of the S-D-S approach. Second, it extends the model to the case of multiproduct firms showing how product diversity is affected with respect to monopolistic competition.

Suggested Citation

  • Ottaviano, G.I.P. & Thisse, J.-F., 1999. "Monopolistic Competition, Multiproduct Firms and Optimum Product Diversity," Economics Working Papers eco99/31, European University Institute.
  • Handle: RePEc:eui:euiwps:eco99/31
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    More about this item

    Keywords

    COMPETITION ; MONOPOLIES ; PRODUCTION;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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