Product Lines and Price Discrimination in the European Car Market

Victor Ginsburgh and Shlomo Weber ()

No 1996007, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: In this paper we consider a model of oligopolistic competition where firms make a two-dimensional product line decision. They choose a location in style space, thus, inducing horizontal differentiation, and produce different qualities (a product line) of a given good (vertical differentiation), consumed by a population of customers who differ in their income and preference for style. We prove existence of a non-cooperative equilibrium and show that, as the degree of competition increases, prices approach marginal cost. The approach is used to show that European car producer seem indeed to use product lines to discriminate across EC countries.

Date: 1996-03-01
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Related works:
Journal Article: Product Lines and Price Discrimination in the European Car Market (2002)
Working Paper: Product lines and price discrimination in the European car market (2002)
Working Paper: Product lines and price discrimination in the European car market (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:1996007

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