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Marketing as an entrance barrier into the fashion market

Listed author(s):
  • Pedro Cosme Costa Vieira

    (Faculdade de Economia do Porto)

In this paper I intend to model a firm decision of entrance into a profitable fashion market where fashion results from the existence of positive interdependence between buyers utility functions. I conclude theoretically that i) when incumbent firm has an aggressive strategy it sets a marketing limit strategy that do not permit the other firm to enter the fashion market and that ii) when incumbent firm accommodates the other firm a la Cournot there is no pure strategy Nash equilibrium. The properties of the model seem to be in accordance with the persistence in time of fashion brands.

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File URL: http://econwpa.repec.org/eps/io/papers/0501/0501008.pdf
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Paper provided by EconWPA in its series Industrial Organization with number 0501008.

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Length: 8 pages
Date of creation: 17 Jan 2005
Handle: RePEc:wpa:wuwpio:0501008
Note: Type of Document - pdf; pages: 8
Contact details of provider: Web page: http://econwpa.repec.org

References listed on IDEAS
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  1. Granovetter, Mark & Soong, Roland, 1986. "Threshold models of interpersonal effects in consumer demand," Journal of Economic Behavior & Organization, Elsevier, vol. 7(1), pages 83-99, March.
  2. Gerard R. Butters, 1977. "Equilibrium Distributions of Sales and Advertising Prices," Review of Economic Studies, Oxford University Press, vol. 44(3), pages 465-491.
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