Product line design

We characterize the product line choice and pricing of a monopolist from the upper envelope of net marginal revenue curves to the individual product demand functions. The equilibrium product line constitutes those varieties yielding the highest upper envelope. In a generalized vertical differentiati...

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Bibliographic Details
Published in:Journal of economic theory 2015-05, Vol.157, p.517-526
Main Authors: Anderson, Simon P., Celik, Levent
Format: Article
Language:English
Subjects:
Cournot multi-product competition
Decision analysis
Demand (economics)
Demand curves
Differentiation
Economic behaviour
Economic equilibrium
Economic theory
Economics
Envelopes
Management science
Monopolies
Oligopoly
Optimization
Pricing
Product differentiation
Product line design
Product line pricing
Product lines
Revenues
Second-degree price discrimination
Studies
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Summary:We characterize the product line choice and pricing of a monopolist from the upper envelope of net marginal revenue curves to the individual product demand functions. The equilibrium product line constitutes those varieties yielding the highest upper envelope. In a generalized vertical differentiation framework, the equilibrium line is exactly the same as the first-best socially optimal line. These upper envelope and first-best optimal line findings extend to symmetric Cournot oligopoly.
ISSN:0022-0531
1095-7235
DOI:10.1016/j.jet.2015.01.014