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Strategic Product Design under Duopoly

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  • Didier Laussel

    (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)

Abstract

Two duopolists first decide in which proportions to incorporate in their product two different Lancasterian characteristics and then compete in quantities or prices. In the Cournot case, minimum differentiation obtains at equilibrium whatever the degree of substituability between the characteristics. In the Bertrand one, the equilibrium depends crucially on the degree of substituability/complementarity between the two characteristics. Maximal differential obtains if and only if the characteristics are strong enough substitutes. On the contrary as characteristics become closer and closer complements one obtains in the limit a minimal differentiation result. JEL Codes: L13. Keyword: Horizontal Product Differentiation, Lancasterian Characteristics.

Suggested Citation

  • Didier Laussel, 2018. "Strategic Product Design under Duopoly," Post-Print hal-01992047, HAL.
    • Handle: RePEc:hal:journl:hal-01992047
    DOI: 10.15609/annaeconstat2009.131.0025
    Note: View the original document on HAL open archive server: https://amu.hal.science/hal-01992047
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    References listed on IDEAS

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    More about this item

    Keywords

    Horizontal Product Differentiation; Lancasterian Characteristics.; Duopoly;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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