Monopolistic Dynamics with Endogenous Product Differentiation

Andrea Caravaggio, Luca Gori () and Mauro Sodini
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Andrea Caravaggio: Department of Economics, University of Foggia, Largo Papa Giovanni Paolo II, I-71121 Foggia, Italy
Mauro Sodini: Department of Law, University of Naples Federico II, I-80138 Napoli, Italy

Mathematics, 2022, vol. 10, issue 3, 1-15

Abstract: This research considers the problem of a price-discriminating monopolist aiming at choosing output and investing in product differentiation to foster consumers perceiving products as being heterogeneous in different market segments. It then introduces bounded rationality and concentrates on the dynamic analysis showing the existence of several dynamic phenomena caused by the interaction between endogenous product differentiation and gradient dynamics. Though product differentiation can generally increase market power and profits, in this context it can generate a lack of coordination between the managers working in each segment.

Keywords: endogenous differentiation; nonlinear monopoly; bifurcations (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2022
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