Multiproduct Quality Competition: Fighting Brands and Product Line Pruning.

Working paper

Firms selling multiple quality-differentiated products frequently alter their product lines when a competitor enters the market. We present a model of multiproduct monopoly and duopoly using a general 'upgrades' approach that yields a powerful analytical framework. We provide a simple theoretical explanation for the common strategies of using 'fighting brands' and of product line 'pruning'. We also present a general condition that guarantees that a monopolist will forsake market segmentation opportunities and sell but a single product. A number of previously studied issues can be addressed by our model, including inter-temporal price discrimiation and 'damaged goods'.

Authors: Myatt, D; Johnson, J

• Publisher: Department of Economics (University of Oxford)
• Series: Discussion paper series
• Publication date: 2002-01-01
• Language: English