Can Rivalry Increase Prices?

Christian Roessler
Additional contact information
Christian Roessler: University of Melbourne

Microeconomics from University Library of Munich, Germany

Abstract: Spatially differentiated duopolists set higher-than-monopoly prices at some distances. This phenomenon is shown to occur in any finite- dimensional space for a class of reservation prices that covers concavity and convexity in perceived distance from a design. But an upper bound on the equilibrium duopoly price converges monotonically and quickly to the monopoly price in dimensionality. If consumers care about sufficiently many features of the product (a very small number of criteria is enough), monopoly nearly leads to an extreme price.

Keywords: price effect of competition; multidimensional product spaces; duopoly pricing; spatial competition (search for similar items in EconPapers)
JEL-codes: C72 D40 D43 L10 L43 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2005-09-26, Revised 2006-02-14
New Economics Papers: this item is included in nep-com, nep-ind and nep-mic
Note: Type of Document - pdf; pages: 39
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://econwpa.ub.uni-muenchen.de/econ-wp/mic/papers/0509/0509007.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpmi:0509007

Access Statistics for this paper

More papers in Microeconomics from University Library of Munich, Germany
Bibliographic data for series maintained by EconWPA ( this e-mail address is bad, please contact ).