Competition between Multiproduct Firms with Heterogeneous
DOI:
https://doi.org/10.14738/assrj.27.1215Abstract
This paper draws upon Feenstra and Ma (2007, 2008), to develop a model of asymmetric competition between multiproduct firms. The model is used to analyze how cost asymmetry affects the equilibrium, with determination of quantity/price as well as product scope per firm. By treating the number of firms as a continuous variable, the model is extended to account for the endogenous determination of the number of firms in a long-run, monopolistically competitive equilibrium, with free entry by heterogeneous firms.References
Allanson, P. and Montagna, C. (2005). Multiproduct firms and market strucH ture: An explorative application to the product life cycle. International'Journal'of'Industrial'Organization, 23:587–597. 12
Eckel, C. and Neary, J. P. (2010). MultiHproduct firms and flexible manufacturing in the global economy. Review'of' Economic'Studies, 77:188–217.
Feenstra, R. C. and Ma, H. (2007). Optimal'choice'of'product'scope'for'multiJproduct'firms'under'monopolistic' competition. Working Paper 13703, NBER.
Feenstra, R. C. and Ma, H. (2008). Optimal choice of product scope for mulH tiproduct firms under monopolistic competition. In Helpman, E., Marin, D., and Verdier, T., editors, The'Organization'of'Firms'in'a'Global'Economy. Harvard University Press.
Johnson, J. P. and Myatt, D. P. (2003). Multiproduct quality competition: Fighting brands and product line pruning. The'American'Economic'Review, 93(3):748–774.
Judd, K. L. (1985). Credible spatial preemption. The'RAND'Journal'of'Economics, 16(2):153–166.
Luong, T. A. (2010). Multiproduct'firms'and'the'endogenous'choice'of'variety. Mimeo. Princeton University.
Melitz, M. J. (2003). The impact of trade on intraHindustry reallocations and aggregate industry productivity. Econometrica, 71(6):1695–1725.
Montagna, C. (1995). Monopolistic competition with firmHspecific costs. Oxford Economic Papers, 47(2):318–328.
Neary, J. P. (2009). Two'and'a'half'theories'of'trade. Discussion Paper 466, University of Oxford, Dept. of Economics.
