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''Multi-product strategies and relative preferences for quality''
( 2008, Vol. 4 No.34 )
In this paper we investigate whether a monopoly in a vertically differentiated market may have the incentive to adopt a multi-product strategy if the consumers are concerned by the other consumers' choices. We use a variant of the Mussa and Rosen model where the utility of a consumer is positively or negatively affected by her relative standing i.e how high or low is the quality she chooses with respect to the other consumers'' choices. We prove that a multi-product strategy may be adopted by the monopoly if the consumers'' social distinction desire is strong enough.
JEL: D4 - Market Structure and Pricing: General
L1 - Market Structure, Firm Strategy, and Market Performance: General
Manuscript Received : Oct 07 2008 Manuscript Accepted : Dec 04 2008

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