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- Title
On Stability in Competition: Tying and Horizontal Product Differentiation.
- Authors
Egli, Alain
- Abstract
We combine Hotelling’s model of product differentiation with tie-in sales. A monopolist in one market competes with another firm in a second market. In equilibrium firms choose zero product differentiation. Due to the tying structure no firm can gain the whole market by a small price reduction. A differentiation effect due to tie-in sales leads to this equilibrium stability.
- Subjects
PRODUCT differentiation; TIE-ins (Marketing); BRAND differentiation; MARKET segmentation; MARKETING strategy; NEW product development
- Publication
Review of Industrial Organization, 2007, Vol 30, Issue 1, p29
- ISSN
0889-938X
- Publication type
Article
- DOI
10.1007/s11151-007-9127-y