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Versioning Goods and Joint Purchase: Substitution and Complementarity Strategies

  • Francisco Martinez

    ()

    (Department of Economic Theory and Economic History, University of Granada.)

We analyze the monopolist’s decision about how to design different versions of a good, i.e. whether to make them substitutes or complements, when consumers can buy them simultaneously. In this context, we find that versioning goods as substitutes or complements may be optimal for the monopolist, and the final result depends on the degree of concavity and convexity of the cost function.

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File URL: http://www.ugr.es/~teoriahe/RePEc/gra/wpaper/thepapers07_06.pdf
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Paper provided by Department of Economic Theory and Economic History of the University of Granada. in its series ThE Papers with number 07/06.

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Length: 12 pages
Date of creation: 31 Dec 2007
Date of revision:
Handle: RePEc:gra:wpaper:07/06
Contact details of provider: Postal: Campus Universitario de Cartuja
Phone: (34)958248346
Fax: (34)958249995
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  1. GABZEWICZ, Jean & SONNAC, Nathalie & WAUTHY, Xavier, . "On price competition with complementary goods," CORE Discussion Papers RP -1505, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. GABSZEWICZ, Jean J. & WAUTHY, Xavier Y., 2001. "The option of joint purchase in vertically differentiated markets," CORE Discussion Papers 2001013, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Jing, Bing, 2007. "Network externalities and market segmentation in a monopoly," Economics Letters, Elsevier, vol. 95(1), pages 7-13, April.
  4. Motta, Massimo, 1993. "Endogenous Quality Choice: Price vs. Quantity Competition," Journal of Industrial Economics, Wiley Blackwell, vol. 41(2), pages 113-31, June.
  5. Stokey, Nancy L, 1979. "Intertemporal Price Discrimination," The Quarterly Journal of Economics, MIT Press, vol. 93(3), pages 355-71, August.
  6. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
  7. GABSZEWICZ, Jean J. & LAUSSEL, Didier & SONNAC, Nathalie, . "Press advertising and the ascent of the `Pensée Unique'," CORE Discussion Papers RP -1512, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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