The option of joint purchase in vertically differentiated markets

Jean Gabszewicz () and Xavier Yves Wauthy

No 2001013, CORE Discussion Papers from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: Within the framework proposed by Mussa and Rosen (1978) for modelling quality differentiation, we allow consumers to buy simultaneously different variants of the same indivisible good. We call this the "joint purchase option". We show that this option dramatically affects price competition: while a unique equilibrium always prevails when consumers are assumed to make mutually exclusive purchases, either uniqueness, or multiplicity, or absence of price equilibrium arise when the joint purchase option is opened depending on the utility attached to joint purchase relative to separate purchases.

JEL-codes: L13 (search for similar items in EconPapers)
Date: 2001-03-01
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Journal Article: The option of joint purchase in vertically differentiated markets (2003)
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Persistent link: http://EconPapers.repec.org/RePEc:cor:louvco:2001013

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