Product Differentiation and Profitability: An Asymmetric Model

Michael Waterson

Journal of Industrial Economics, 1990, vol. 39, issue 2, 113-30

Abstract: The purpose of this paper is to develop a model of product differentiation in which there is an asymmetry, namely that some customers are easier to serve than others. It turns out that profits are negatively related to difficulty of service, and that profits and market share are negatively related. The results of this model are used to shed light on some aspects of the collusion versus differential efficiency debate, and are also compared with vertical product differentiation models. Copyright 1990 by Blackwell Publishing Ltd.

Date: 1990
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