Market Performance with Multiproduct Firms1
نویسندگان
چکیده
We revisit the fundamental issue of market provision of variety associated with Chamberlin, Spence, and Dixit-Stiglitz when Þrms sell multiple products. Both products and Þrms are (horizontally) differentiated. We propose a general nested demand framework where consumers Þrst decide upon a Þrm then which variant to buy and how much (the nested CES is a special case) . We use it to determine the markets biases when Þrms compete in product ranges and prices. The market system attracts too many Þrms with too few products per Þrm: Þrms restrain product ranges to relax price competition, but this exacerbates over-entry.
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