IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/46468.html
   My bibliography  Save this paper

Locating inside the Salop circle: Demand rotations in a micro-founded model

Author

Listed:
  • Bar-Isaac, Heski
  • Caruana, Guillermo
  • Cuñat, Vicente

Abstract

We present a micro-founded model of design, that provides a framework in which design leads to demand rotations. We show simple sufficient conditions that determine when design should be extreme (fully standardized or fully tailored) or rather be only partially tailored.

Suggested Citation

  • Bar-Isaac, Heski & Caruana, Guillermo & Cuñat, Vicente, 2013. "Locating inside the Salop circle: Demand rotations in a micro-founded model," MPRA Paper 46468, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:46468
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/46468/1/MPRA_paper_46468.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Simon P. Anderson & Régis Renault, 2006. "Advertising Content," American Economic Review, American Economic Association, vol. 96(1), pages 93-113, March.
    2. Thomas von Ungern-Sternberg, 1988. "Monopolistic Competition and General Purpose Products," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 55(2), pages 231-246.
    3. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
    4. Hendel, Igal & de Figueiredo, John Neiva, 1997. "Product differentiation and endogenous disutility," International Journal of Industrial Organization, Elsevier, vol. 16(1), pages 63-79, November.
    5. Lewis, Tracy R & Sappington, David E M, 1994. "Supplying Information to Facilitate Price Discrimination," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 35(2), pages 309-327, May.
    6. Tirole, Jean & Weyl, Glen, 2010. "Materialistic Genius and Market Power: Uncovering the best innovations," IDEI Working Papers 629, Institut d'Économie Industrielle (IDEI), Toulouse.
    7. Justin P. Johnson & David P. Myatt, 2006. "On the Simple Economics of Advertising, Marketing, and Product Design," American Economic Review, American Economic Association, vol. 96(3), pages 756-784, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. González-Maestre, Miguel & Granero, Lluís M., 2018. "Competition with targeted product design: Price, variety, and welfare," International Journal of Industrial Organization, Elsevier, vol. 59(C), pages 406-428.
    2. González-Maestre, Miguel & Granero, Lluís M., 2020. "Excessive vs. insufficient entry in spatial models: When product design and market size matter," Mathematical Social Sciences, Elsevier, vol. 106(C), pages 27-35.
    3. Emir Kamenica & Matthew Gentzkow, 2011. "Bayesian Persuasion," American Economic Review, American Economic Association, vol. 101(6), pages 2590-2615, October.
    4. Heski Bar-Isaac & Guillermo Caruana & Vicente Cuñat, 2023. "Targeted Product Design," American Economic Journal: Microeconomics, American Economic Association, vol. 15(2), pages 157-186, May.
    5. Alexander E. Saak, 2012. "Dynamic Informative Advertising of New Experience Goods," Journal of Industrial Economics, Wiley Blackwell, vol. 60(1), pages 104-135, March.
    6. Levent Celik, 2014. "Information Unraveling Revisited: Disclosure of Horizontal Attributes," Journal of Industrial Economics, Wiley Blackwell, vol. 62(1), pages 113-136, March.
    7. Archishman Chakraborty & Rick Harbaugh, 2014. "Persuasive Puffery," Marketing Science, INFORMS, vol. 33(3), pages 382-400, May.
      • Archishman Chakraborty & Rick Harbaugh, 2012. "Persuasive Puffery," Working Papers 2012-05, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    8. Wang, Chengsi, 2011. "Informative Advertising, Consumer Search and Transparency Policy," MPRA Paper 34977, University Library of Munich, Germany.
    9. Burak Dindaroglu, 2023. "Product design in monopolistic competition," International Journal of Economic Theory, The International Society for Economic Theory, vol. 19(3), pages 471-488, September.
    10. Alexander E. Saak, 2011. "A Model of Labeling with Horizontal Differentiation and Cost Variability," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 93(4), pages 1131-1150.
    11. Zhang, Tianle, 2010. "Advance-Purchase Programs: When to Introduce and What to Inform Consumers," MPRA Paper 25606, University Library of Munich, Germany.
    12. Salvatore Piccolo & Piero Tedeschi & Giovanni Ursino, 2018. "Deceptive Advertising with Rational Buyers," Management Science, INFORMS, vol. 64(3), pages 1291-1310, March.
    13. Mark Armstrong & Jidong Zhou, 2022. "Consumer Information and the Limits to Competition," American Economic Review, American Economic Association, vol. 112(2), pages 534-577, February.
    14. Sencer Ecer, 2003. "Sequential Product Design," Netnomics, Springer, vol. 5(1), pages 33-42, May.
    15. Bing Jing, 2011. "Exogenous Learning, Seller-Induced Learning, and Marketing of Durable Goods," Management Science, INFORMS, vol. 57(10), pages 1788-1801, October.
    16. Lyu, Chen, 2023. "Information design for selling search goods and the effect of competition," Journal of Economic Theory, Elsevier, vol. 213(C).
    17. Mikhail Drugov & Marta Troya‐Martinez, 2019. "Vague lies and lax standards of proof: On the law and economics of advice," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 28(2), pages 298-315, April.
    18. Heski Bar‐Isaac & Guillermo Caruana & Vicente Cuñat, 2010. "Information Gathering and Marketing," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 19(2), pages 375-401, June.
    19. Agostino Manduchi, 2013. "Non-neutral information costs with match-value uncertainty," Journal of Economics, Springer, vol. 109(1), pages 1-25, May.
    20. Semyon Malamud & Andreas Schrimpf, 2021. "Persuasion by Dimension Reduction," Swiss Finance Institute Research Paper Series 21-69, Swiss Finance Institute.

    More about this item

    Keywords

    Demand Rotations; Salop Circle; Product Design;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L00 - Industrial Organization - - General - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:46468. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.