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Model Exit in a Vertically Differentiated Market: Interfirm Competition versus Intrafirm Cannibalization in the Computer Hard Disk Drive Industry

Christopher Ruebeck

Review of Industrial Organization, 2004, vol. 26, issue 1, 27-59

Abstract: What characteristics of a product’s local market make its withdrawal more likely? This study investigates the importance of intrafirm “cannibalization” of a product’s demand by products manufactured by the same firm versus interfirm competition from others’ products. While both forces impact product withdrawal, cannibalization has a more robust and significant effect. Hedonic price regressions also reveal higher discounting of older models’ quality-adjusted prices, strengthening the argument for caution when treating list prices as proxies for transaction prices. Copyright Springer 2004

Keywords: differentiated products; exit; hedonic price index; transaction prices; variable hazard rate; withdrawal (search for similar items in EconPapers)
Date: 2004
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DOI: 10.1007/s11151-004-6576-4

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