Bar-Isaac, Heski, Caruana, Guillermo and Cuñat, Vicente ORCID: 0000-0001-7504-2801
(2021)
Targeted product design.
American Economic Journal: Microeconomics.
ISSN 1945-7669
(In Press)
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Abstract
We propose an intuitive representation of product design in which firms locate inside a circle and consumers in its outer circumference. Designs trade-off horizontal and vertical transport costs. Our setting encompasses all linear demand rotations. Firms with lower quality and/or higher marginal costs choose niche designs that cater to specific consumers at the expense of alienating the rest. Firms choose intermediate designs or more polarized ones instead depending on the convexity of the vertical transport cost. We examine such design choices in monopoly, duopoly, and monopolistic competition settings.
Item Type: | Article |
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Official URL: | https://www.aeaweb.org/journals/mic |
Additional Information: | © 2022 American Economic Association |
Divisions: | Finance |
Subjects: | H Social Sciences > HB Economic Theory |
Date Deposited: | 24 Jan 2022 10:27 |
Last Modified: | 31 May 2022 15:12 |
URI: | http://eprints.lse.ac.uk/id/eprint/113517 |
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