Chapter

Product Differentiation

Jean J. Gabszewicz

in Strategic Interaction and Markets

Published in print January 2000 | ISBN: 9780198233411
Published online November 2003 | e-ISBN: 9780191596292 | DOI: http://dx.doi.org/10.1093/0198233418.003.0004
Product Differentiation

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Abandons the assumption of a homogenous product to tackle the problem of competition among firms selling differentiated products. First, the role product differentiation is studied in the monopoly case: the problems of a monopolist selecting a ladder of substitute products, or selecting the quality of a particular product, are successively examined. Then, coming back to strategic competition, we analyse duopoly assuming that the rivals not only choose the price but also the product itself. The two cases of horizontal and vertical differentiation are considered. Also, the effects of entry are analysed in these two cases.

Keywords: duopoly; firms; Hotelling; monopoly; product; product differentiation; quality

Chapter.  8619 words.  Illustrated.

Subjects: Microeconomics

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