Monopolistic competition, multiproduct firms and optimum product diversity

Gianmarco Ottaviano and Jacques Thisse

No 1999019, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: This paper tackles the issue of optimum product diversity in an imperfectly competitive market with small or large firms. First, it develops a quadratic utility model of monopolistic competition with horizontal product differentiation which avoids some of the main pitfalls of the S-D-S approach. Second, it extends the model to the case of multiproduct firms showing how product diversity is affected with respect to monopolistic competition. In particular, it is shown that monopolistic competition with single-product firms is the limiting case of oligopolistic competition with multiproduct firms when either varieties gets more and more differentiated or when the entry cost goes further and further down.

Date: 1999-03-01
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Citations: View citations in EconPapers (49)

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Related works:
Working Paper: Monopolistic Competition, Multiproduct Firms and Optimum Product Diversity (1999)
Working Paper: Monopolistic Competition, Multiproduct Firms and Optimum Product Diversity (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:1999019

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