On Stability in Competition: Tying and Horizontal Product Differentiation

Alain Egli ()

Review of Industrial Organization, 2007, vol. 30, issue 1, 29-38

Abstract: We combine Hotelling’s model of product differentiation with tie-in sales. A monopolist in one market competes with another firm in a second market. In equilibrium firms choose zero product differentiation. Due to the tying structure no firm can gain the whole market by a small price reduction. A differentiation effect due to tie-in sales leads to this equilibrium stability. Copyright Springer Science+Business Media, LLC 2007

Keywords: Horizontal product differentiation; Hotelling; Tie-in sales; Equilibrium existence; D43; L10; L11; L13 (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (9)

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DOI: 10.1007/s11151-007-9127-y

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