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Product line extensions and competitive market interactions: an empirical analysis

Kadiyali, Vrinda, Vilcassim, Naufel J. ORCID: 0000-0003-0192-8014 and Chintagunta, Pradeep (1999) Product line extensions and competitive market interactions: an empirical analysis. Journal of Econometrics, 89 (1-2). pp. 339-363. ISSN 0304-4076

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Identification Number: 10.1016/S0304-4076(98)00066-9


Line extensions (i.e., the introduction of a new product that is a variation of a firm's existing product) are an important competitive instrument in consumer non-durable products. Using the `new empirical industrial organization' methodology, we examine the impact of a line extension on price competition between two national yogurt manufacturers. We find that the extending firm gains price-setting power. Additionally, the positioning of the line extension grows the combined sales, and raises the average weekly contributions for both the extending firm and the rival firm. We also discuss additional insights into the nature of competition before and after the extension.

Item Type: Article
Official URL:
Additional Information: © 1999 Elsevier Science
Divisions: Management
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HF Commerce
Date Deposited: 01 Mar 2017 09:59
Last Modified: 15 May 2024 23:45

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