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Product differentiation in a vertical structure

journal contribution
posted on 25.01.2021, 15:12 by Tien-Der Han, M Emranul Haque, Arijit Mukherjee
We consider final goods producers’ preference for horizontal product differentiation in the presence of strategic input price determination. Final goods producers may not prefer maximal differentiation but may prefer moderate differentiation under both Cournot and Bertrand competition in the final goods market if product differentiation does not increase the market size significantly and there is either free entry in the input market or the input supplier has increasing returns to scale technology. Thus, we provide a new rationale for moderate product differentiation. Our reasons are different from the existing reasons of mixed pricing strategy, endogenous leadership, no-buy option for the consumers and the relative performance incentive schemes.

History

School

  • Business and Economics

Department

  • Economics

Published in

The B.E. Journal of Theoretical Economics

Publisher

Walter de Gruyter GmbH

Version

VoR (Version of Record)

Rights holder

© Walter de Gruyter

Publisher statement

This paper was published in the journal The B.E. Journal of Theoretical Economics and is available at https://doi.org/10.1515/bejte-2020-0037.

Acceptance date

27/09/2020

Publication date

2020-11-16

Copyright date

2020

ISSN

2194-6124

eISSN

1935-1704

Language

en

Depositor

Dr Tien-Der Jerry Han. Deposit date: 20 January 2021

Exports

Read the paper on the publisher website

Loughborough Publications

Categories

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