Multi-product strategies and relative preferences for quality

Hend Ghazzai ()

Economics Bulletin, 2008, vol. 4, issue 34, 1-10

Abstract: In this paper we investigate whether a monopoly in a vertically differentiated market may have the incentive to adopt a multi-product strategy if the consumers are concerned by the other consumers' choices. We use a variant of the Mussa and Rosen model where the utility of a consumer is positively or negatively affected by her relative standing i.e how high or low is the quality she chooses with respect to the other consumers'' choices. We prove that a multi-product strategy may be adopted by the monopoly if the consumers'' social distinction desire is strong enough.

JEL-codes: D4 L1 (search for similar items in EconPapers)
Date: 2008-12-04
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Citations: View citations in EconPapers (4)

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