Product Line Rivalry and Firm Asymmetry

Zhihong Chen and Zhiqi Chen

Journal of Industrial Economics, 2014, vol. 62, issue 3, 417-435

Abstract: type="main">

We extend the Brander and Eaton (1984) model of product line rivalry to study the effects of asymmetry between firms on the equilibrium outcome. Our analysis shows that market interlacing can emerge as the equilibrium outcome even in situations where market segmentation would have been the only possible outcome had the firms been symmetric. We identify two strategic factors that lead to such an outcome.

Date: 2014
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