Hotelling meets Shaked and Sutton: a unified linear model of product differentiation

Armin Schmutzler

No 461, ECON - Working Papers from Department of Economics - University of Zurich

Abstract: This paper provides a simple unified discrete-choice framework for analyzing differentiated duopolies. This framework nests models of horizontal and vertical differentiation, including standard textbook models (Hotelling and Shaked-Sutton). Contrary to these models, it also applies to economic environments where horizontal differentiation coincides with positive correlation of product valuations across consumers, and environments where vertical differentiation coincides with negative correlation. The paper provides an equilibrium characterization that is applicable independently of the type of differentiation and the sign of the valuation correlation.

Keywords: Duopoly; differentiated products; price competition (search for similar items in EconPapers)
JEL-codes: D43 L13 (search for similar items in EconPapers)
Date: 2025-01
New Economics Papers: this item is included in nep-com, nep-gth, nep-ind and nep-mic
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.zora.uzh.ch/id/eprint/266479/1/econwp461.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zur:econwp:461

Access Statistics for this paper

More papers in ECON - Working Papers from Department of Economics - University of Zurich Contact information at EDIRC.
Bibliographic data for series maintained by Severin Oswald ().