Price responses to market entry with and without endogenous product choice

  • Textbook wisdom says that competition yields lower prices and higher consumer surplus than monopoly. We show in two versions of a simple location-product differentiation model with and without endogenous choice of products that these two results have to be qualified. In both models, more than half of the reasonable parameter values lead to higher prices with duopoly than with monopoly. If the product characteristics are exogenous to the firms, consumers may even be be better off with monopoly in average.

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Metadaten
Author:Helge Sanner
URN:urn:nbn:de:kobv:517-opus-14399
Series (Serial Number):Volkswirtschaftliche Diskussionsbeiträge (Bd. 081)
Document Type:Book
Language:English
Date of Publication (online):2007/06/22
Year of Completion:2005
Publishing Institution:Universität Potsdam
Release Date:2007/06/22
RVK - Regensburg Classification:QD 300
Organizational units:Wirtschafts- und Sozialwissenschaftliche Fakultät / Wirtschaftswissenschaften
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
Notes extern:Sanner, Helge: Price responses to market entry with and without endogenous product choice / Helge Sanner. - Potsdam : Univ., 2005. - 22 Bl. : graph. Darst.
(Volkswirtschaftliche Diskussionsbeiträge : Diskussionsbeitrag ; 81)