ECON 305 Lecture 7: ECON 305 Lecture 7.pdf
11 Dec 2014
School
Department
Course
Professor
Document Summary
Product differentiation (pdf) exists where buyers distinguish between or have specific preferences for competing outputs, either of different or the same seller. Horizontal: taste-location differences (attribute of a commodity?) Characteristic space: a continuum spanning from one characteristic to its opposite e. g. sweet not sweet. Influencing market structure, firm behavior and performance (s,c,p) Services (pre- and post-sale) (subjective) image differentiation. Some awkward facts (eaton and lipsey) criticism of the dixit-styglitz"s model. Most industries, especially consumer good, produce a large number of similar, but differentiated products (characterizes monopolistic competition ) In most industries, each firm produces a range of differentiated products (characterizes differentiated oligopoly ) Consumers perceive differences among differentiated products to be real. Tastes are revealed to vary among consumers, whose bundle of differentiated products (in terms of brands) cannot be fully accounted for by their incomes. The rcm is the basis for the traditional model of monopolistic competition a market with many sellers with a differentiated product.
