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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
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    File URL: https://mpra.ub.uni-muenchen.de/46468/1/MPRA_paper_46468.pdf
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    References listed on IDEAS

    as
    1. 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.
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    5. 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.
    6. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
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    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

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