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- Title
Salience and horizontal differentiation.
- Authors
Aytimur, R. Emre
- Abstract
I study a horizontal differentiation model in which one of two attributes of a product, product fit and price, is more salient for a consumer than the other and different consumers can find a different attribute salient. The attribute that is more salient is determined by relative differences between the two products and is determined endogenously as a result of firms' pricing strategies. High (low) marginal costs soften (toughen) price competition between firms. Pass‐through rates are greater than 1 for some parameter values. Both industry‐ and firm‐level cost increases may be beneficial for firms.
- Subjects
PRICES; DIRECT costing; PRODUCT attributes; CONSUMERS
- Publication
Canadian Journal of Economics, 2023, Vol 56, Issue 1, p60
- ISSN
0008-4085
- Publication type
Article
- DOI
10.1111/caje.12632