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Product Differentiation and Competitive Selection

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  • Serguei Kaniovski

Abstract

By studying the effect of different patterns of demand in an evolutionary selection model this paper shows how product differentiation reduces competitive selection pressure and thus increases the chances for the coexistence of firms. With the example of a duopoly it shows that: (1) a monopoly is the likely outcome of competition in homogeneous products, (2) although product differentiation does not preclude a monopoly it greatly improves the chances for the stable coexistence of firms in the long run, and (3) the more differentiated the products, the more stable the duopoly. Copyright Springer-Verlag Berlin/Heidelberg 2005
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  • Serguei Kaniovski, 2005. "Product Differentiation and Competitive Selection," WIFO Working Papers 252, WIFO.
    • Handle: RePEc:wfo:wpaper:y:2005:i:252
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    File URL: https://www.wifo.ac.at/wwa/pubid/25565
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    References listed on IDEAS

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    Cited by:

    1. Jiancai Pi & Xiangyu Huang, 2021. "Product Variety and Wage Inequality," Annals of Economics and Finance, Society for AEF, vol. 22(1), pages 135-151, May.
    2. Werner Hölzl, 2012. "Mobility Barriers and the Speed of Market Selection," WIFO Working Papers 437, WIFO.

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