Product lines and price discrimination in the European car market
In this paper we consider a model of oligopolistic competition where firms make a two-dimensional product line decision. They choose a location in style space, thus inducing horizontal differentiation, and produce different qualities (a product line) of a given good (vertical differentiation), consumed by a population of customers who differ in their income and preference for style. We prove the existence of a non-cooperative equilibrium and show that, as the degree of competition increases, prices approach marginal cost. The approach is used to show that European car producers seem indeed to use product lines to discriminate across EU countries. Copyright 2002 by Blackwell Publishers Ltd and The Victoria University of Manchester
(This abstract was borrowed from another version of this item.)
|Date of creation:||2002|
|Date of revision:|
|Publication status:||Published in: The Manchester School (2002) v.70,p.101-114|
|Contact details of provider:|| Postal: CP135, 50, avenue F.D. Roosevelt, 1050 Bruxelles|
Web page: http://difusion.ulb.ac.be
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- James Brander & Jonathan Eaton, 1982.
"Product Line Rivalry,"
519, Queen's University, Department of Economics.
- Victor Ginsburgh & Geneviève Vanhamme, 1989.
"Price Differences in the EC Car Market. Some Further Results,"
Annals of Economics and Statistics,
GENES, issue 15-16, pages 137-149.
- Victor Ginsburgh & Geneviève Vanhamme, 1989. "Price differences in the EC car market: some further results," ULB Institutional Repository 2013/1737, ULB -- Universite Libre de Bruxelles.
- Avner Shaked & John Sutton, 1982. "Relaxing Price Competition Through Product Differentiation," Review of Economic Studies, Oxford University Press, vol. 49(1), pages 3-13.
- Novshek, William, 1980. "Equilibrium in simple spatial (or differentiated product) models," Journal of Economic Theory, Elsevier, vol. 22(2), pages 313-326, April.
- Steven Berry & James Levinsohn & Ariel Pakes, 2001.
"Differentiated Products Demand Systems from a Combination of Micro and Macro Data: The New Car Market,"
Cowles Foundation Discussion Papers
1337, Cowles Foundation for Research in Economics, Yale University.
- Steven Berry & James Levinsohn & Ariel Pakes, 2004. "Differentiated Products Demand Systems from a Combination of Micro and Macro Data: The New Car Market," Journal of Political Economy, University of Chicago Press, vol. 112(1), pages 68-105, February.
- Levinsohn, James & Berry, Steven & Pakes, Ariel, 2004. "Differentiated Products Demand Systems from a Combination of Micro and Macro Data: The New Car Market," Scholarly Articles 3436404, Harvard University Department of Economics.
- Steven Berry & James Levinsohn & Ariel Pakes, 1998. "Differentiated Products Demand Systems from a Combination of Micro and Macro Data: The New Car Market," NBER Working Papers 6481, National Bureau of Economic Research, Inc.
- Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
- Horstmann, Ignatius & Slivinski, Alan, 1985. "Location models as models of product choice," Journal of Economic Theory, Elsevier, vol. 36(2), pages 367-386, August.
- Gilbert, Richard J & Matutes, Carmen, 1993.
"Product Line Rivalry with Brand Differentiation,"
Journal of Industrial Economics,
Wiley Blackwell, vol. 41(3), pages 223-40, September.
- Richard J. Gilbert and Carmen Matutes., 1989. "Product Line Rivalry with Brand Differentiation," Economics Working Papers 89-103, University of California at Berkeley.
- Gilbert, Richard J. & Matutes, Carmen, 1989. "Product Line Rivalry with Brand Differentiation," Department of Economics, Working Paper Series qt1nr3k6nk, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-90, July.
- Mertens, Yves & Ginsburgh, Victor, 1985.
"Product Differentiation and Price Discrimination in the European Community: The Case of Automobiles,"
Journal of Industrial Economics,
Wiley Blackwell, vol. 34(2), pages 151-66, December.
- MERTENS, Yves & GINSBURGH, Victor, . "Product differentiation and price discrimination in the European Community: The case of automobiles," CORE Discussion Papers RP 672, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Victor Ginsburgh & Yves Mertens, 1985. "Product differentiation and discrimination in the European Community: the case of automobiles," ULB Institutional Repository 2013/1755, ULB -- Universite Libre de Bruxelles.
- Frank Verboven, 1996. "International Price Discrimination in the European Car Market," RAND Journal of Economics, The RAND Corporation, vol. 27(2), pages 240-268, Summer.
- Goldberg, Pinelopi Koujianou, 1995. "Product Differentiation and Oligopoly in International Markets: The Case of the U.S. Automobile Industry," Econometrica, Econometric Society, vol. 63(4), pages 891-951, July.
When requesting a correction, please mention this item's handle: RePEc:ulb:ulbeco:2013/1689. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Benoit Pauwels)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.