The Logit Model of Monopolistic Competition: Brand Diversity

David Besanko, Martin K Perry and Richard H Spady

Journal of Industrial Economics, 1990, vol. 38, issue 4, 397-415

Abstract: One of the important issues in the literature on monopolistic competition concerns whether the free entry equilibrium will provide sufficient variety of differentiated brands. This paper examines variety issue using the logit choice model to capture brand differentiation. The consumption value of each brand is drawn from the extreme value distribution, and the consumer then purchases the brand with the highest value. With the resulting demand structure, the authors' find that monopolistic competition results in two few firms and, thus, too few brands from the viewpoint of consumers. This result supports the findings of other models with symmetrically differentiated brands. Copyright 1990 by Blackwell Publishing Ltd.

Date: 1990
References: Add references at CitEc
Citations: View citations in EconPapers (24)

Downloads: (external link)
http://links.jstor.org/sici?sici=0022-1821%2819900 ... 0.CO%3B2-G&origin=bc full text (application/pdf)
Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

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:bla:jindec:v:38:y:1990:i:4:p:397-415

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0022-1821

Access Statistics for this article

Journal of Industrial Economics is currently edited by Pierre Regibeau, Yeon-Koo Che, Kenneth Corts, Thomas Hubbard, Patrick Legros and Frank Verboven

More articles in Journal of Industrial Economics from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().