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Product Relocation and Resistance to Change

Author

Listed:
  • Selim, Tarek

Abstract

This paper considers a duopoly market characterization where demand is horizontally differentiated by taste while firms vertically differentiate their products based on quality location. However, firms are able to relocate their product offerings based on changing consumer taste. In general, it is found that a “resistance to change” exists such that firms dislike quality relocation and prefer stable preferences in quality. Yet, a relative change in horizontal preferences may result in wider quality spreads in the market through vertical quality relocations, even though the resistance to change argument may still hold good.

Suggested Citation

  • Selim, Tarek, 2006. "Product Relocation and Resistance to Change," MPRA Paper 119507, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:119507
    as

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    File URL: https://mpra.ub.uni-muenchen.de/119507/1/MPRA_paper_119507.pdf
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    References listed on IDEAS

    as
    1. Nirvikar Singh & Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 546-554, Winter.
    2. Avner Shaked & John Sutton, 1982. "Relaxing Price Competition Through Product Differentiation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 49(1), pages 3-13.
    3. Cremer, Helmuth & Thisse, Jacques-Francois, 1991. "Location Models of Horizontal Differentiation: A Special Case of Vertical Differentiation Models," Journal of Industrial Economics, Wiley Blackwell, vol. 39(4), pages 383-390, June.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    brand relocation; quality choice; brand space positioning; product differentiation; market asymmetry; quality characteristics; consumer demand; supply repositioning;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D49 - Microeconomics - - Market Structure, Pricing, and Design - - - Other
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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