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Nikolaos Georgantzís () and Aurora García Gallego ()
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Aurora García Gallego: Universitat Jaume I

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Working Papers. Serie EC from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: The Bulow et al. [1985] framework is explored assuming demand and/or production relations. A multiproduct firm is assumed to have a single product rival in one of the two submarkets in which it participates. In the case of linear demand and cost functions, the direct and the strategic effects of the multiproduct firm's actions with respect to the first product on the strategies of its rival in the supply of the second product cancel out entirely. In the presence of both demand and production relations and with more general specifications of demand and cost functions, we produce testable hypotheses concerning the market shares of each firm in each market. The price-setting version of the model produces similar results as far as market shares are concerned. We suggest the Tetra Pak case as a real-world example.

Keywords: strategic/production/demand complementarity; strategic/production/demand substitutability. (search for similar items in EconPapers)
Pages: 44 pages
Date: 1995-01
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