Abstract:
We consider when homogeneous goods quantity competition models are payoff equivalent to heterogeneous goods models. When they are equivalent, changes in some cost parameters are equivalent to changes in some demand parameters. Going from homogeneous models to heteregeneous models is always possible, but the converse is not easy. We characterize when the converse is possible for linearly separable and multiplicatively separable heterogeneous models. These results have implications that blur the distinction between process and product innovation.
More papers in Working Papers from Australian National University - Department of Economics Address: THE AUSTRALIAN NATIONAL UNIVERSITY, DEPARTMENT OF ECONOMICS, RESEARCH SCHOOL of PACIFIC STUDIES, RESEARCH SCHOOL OF SOCIAL SCIENCES, G.P.O. 4, CANBERRA ACT 2601 AUSTRALIA..O. BOX 4 CANBERRA 2601 AUSTRALIA. Contact information at EDIRC. Series data maintained by Thomas Krichel ().