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MONOPOLISTIC COMPETITION, MULTIPRODUCT FIRMS AND PRODUCT DIVERSITY *
Author(s) -
OTTAVIANO GIANMARCO I. P.,
THISSE JACQUESFRANÇOIS
Publication year - 2011
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/j.1467-9957.2009.02165.x
Subject(s) - monopolistic competition , product differentiation , oligopoly , economics , competition (biology) , diversity (politics) , microeconomics , industrial organization , scope (computer science) , strategic complements , product (mathematics) , economies of scope , monopoly , economies of scale , cournot competition , ecology , computer science , geometry , mathematics , sociology , anthropology , biology , programming language
This paper has two objectives. First, it presents a linear model of monopolistic competition in which weak strategic interactions among single‐product firms are allowed for. Second, it extends this model to the case of multiproduct firms, thus showing how product diversity is affected by strong strategic interactions among oligopolists. In our setting, monopolistic competition with single‐product firms is a good approximation of oligopolistic competition with multiproduct firms either when varieties are sufficiently differentiated or when scope economies are low.