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Multi-product Firms and Product Variety

AutorCaminal, Ramón ; Granero, Luis M.
Palabras claveProduct variety
Multiproduct firms
Monopolistic
Fecha de publicación10-mar-2008
SerieUFAE and IAE Working Papers
734.08
ResumenThe goal of this paper is to study the role of multi-product firms in the market provision of product variety. The analysis is conducted using the spokes model of non-localized competition proposed by Chen and Riordan (2007). Firstly, we show that multi-product firms are at a competitive disadvantage vis-a-vis single-product firms and can only emerge if economies of scope are sufficiently strong. Secondly, under duopoly product variety may be higher or lower with respect to both the first best and the monopolistically competitive equilibrium. However, within a relevant range of parameter values duopolists drastically restrict their product range in order to relax price competition, and as a result product variety is far below the efficient level.
DescripciónA preliminary version of this paper was circulated under the title "Too many or too few varieties: the role of multi-product firms" (CEPR Discussion Papers; 5938, Nov. 2006).-- Trabajo publicado como artículo en Economica 79(314): 303-328 (2012).-- http://dx.doi.org/10.1111/j.1468-0335.2011.00897.x
Versión del editorhttp://dx.doi.org/10.1111/j.1468-0335.2011.00897.x
URIhttp://hdl.handle.net/10261/4341
DOI10.1111/j.1468-0335.2011.00897.x
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