期刊
INTERNATIONAL JOURNAL OF INDUSTRIAL ORGANIZATION
卷 59, 期 -, 页码 406-428出版社
ELSEVIER SCIENCE BV
DOI: 10.1016/j.ijindorg.2018.02.009
关键词
Price-increasing competition; Welfare; Targeted product design; Generic product design
类别
资金
- Spanish Ministry of Economy and Competitiveness under projects MINECO/FEDE, EU [ECO2015-63679-P, ECO2014-53419-R]
We consider the price and welfare effects of competition in targeted product design, in the context of the Salop circle model. Changes in product design lead to demand rotations that set the stage for our analysis. With an exogenous number of firms, we show that the degree of targeted product design tends to increase with the number of firms. Moreover, under reasonable conditions, price-increasing competition takes place, for intermediate levels of the number of firms. This effect is associated with the possibility of lower consumer welfare. With endogenous firm entry, an interesting insight from our analysis is that in some situations an increase in market size or a technological progress that reduces entry costs both might reduce consumers' welfare. (C) 2018 Elsevier B.V. All rights reserved.
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