Market Equilibrium and Optimal Product Diversity: A Logit Specification

Simon Anderson and André de Palma ()

Working Paper from Economics Department, Queen's University

Abstract: This paper has two objectives. First, we present the logit model of discrete consumer choice and apply it to an oligopoly model of product differentiation. Second, we reconsider the question of monopolistic competition and optimal product diversity. The model suggests that when the market outcome involves a large number of products, the market solution does not deviate far from the social optimum.

Pages: 59 pages
Date: 1985
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Working Paper: Market equilibrium and optimal product diversity: a logit specification (1986)
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Persistent link: https://EconPapers.repec.org/RePEc:qed:wpaper:630

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