Nesting horizontal and vertical differentiation
Jean Gabszewicz () and
Regional Science and Urban Economics, 2012, vol. 42, issue 6, 998-1002
We explore a variant of the Hotelling model which allows to nest horizontal and vertical differentiation into a unified setup whose key parameter is the relative natural market size of the firms. In this setup, equilibrium prices increase whenever population's disparity decreases. We also explore the properties of the model in the case of entry by a vertically differentiated product into an otherwise horizontally differentiated industry.
Keywords: Horizontal differentiation; Vertical differentiation; Hotelling (search for similar items in EconPapers)
JEL-codes: L13 (search for similar items in EconPapers)
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Working Paper: Nesting horizontal and vertical differentiation (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:regeco:v:42:y:2012:i:6:p:998-1002
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