The Mainstream Niche

Renaud Foucart

No 670, Economics Series Working Papers from University of Oxford, Department of Economics

Abstract: Consumption in the time of Internet is characterized by extremely low search costs, leading to increased product diversity (the long tail) and large mainstream products (superstars). In this paper, I show how the mainstream taste can be catered by a niche product, while minority tastes can be mainstream. A competitive market with arbitrarily small search costs supplies a product design corresponding to the mainstream taste at a price that only mainstream buyers are willing to pay. Products corresponding to the taste of the minority are offered at lower price, and bought by several types of buyers.

Keywords: Search; matching; horizontal product diversity (search for similar items in EconPapers)
JEL-codes: C7 D8 L11 (search for similar items in EconPapers)
Date: 2013-07-26
New Economics Papers: this item is included in nep-com and nep-mkt
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