Product Variety and Imperfectly Competitive Free-Entry Industries: Policy Design, Conjectural Equilibria and Consumption Externalities

Gareth Myles ()

No 268244, Economic Research Papers from University of Warwick - Department of Economics

Abstract: This paper analyses the properties of a model of imperfect competition in conjunction with a preference for product variety. When the consumer treats product variety as parametric, a tax scheme is described that generates a socially optimal equilibrium from market behaviour. Welfare-improving and optimal commodity taxes are also discussed. An alternative, conjectural, definition of equilibrium is introduced; for a single consumer model this is argued to result in greater variety and utility. If further consumers are introduced, variety causes externalities in consumption; their effects are analysed and policies to overcome these discussed.

Keywords: Agricultural and Food Policy; Consumer/Household Economics; Marketing (search for similar items in EconPapers)
Pages: 41
Date: 1987-09-09
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uwarer:268244

DOI: 10.22004/ag.econ.268244

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