On the consistent use of linear demand systems if not all varieties are available
Felix Höffler ()
No 08-01, WHU Working Paper Series - Economics Group from WHU - Otto Beisheim School of Management
Linear demand formulations for price competition in horizontally differentiated products are sometimes used to compare situations where additional varieties become available, e.g. due to market entry of new firms. We derive a consistent demand system to analyze such situations and highlight potential problems that can arise from an inconsistent approach.
Keywords: Horizontal product differentiation; preferences for variety; market entry (search for similar items in EconPapers)
JEL-codes: D1 L1 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:whu:wpaper:08-01
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