Date of this Version
Quantitative Marketing and Economics
This paper investigates empirically the product assortment strategies of oligopolistic firms. We develop a framework that integrates product choice and price competition in a differentiated product market. The present model significantly improves upon the reduced-form profit functions typically used in the entry and location choice literature, because the variable profits that enter the product-choice decision are derived from a structural model of demand and price competition. Given the heterogeneity in consumers’ product valuations and responses to price changes, this is a critical element in the analysis of product assortment decisions. Relative to the literature on structural demand models, our results show that incorporating endogenous product choice is essential for policy simulations and may entail very different conclusions from settings where product assortment choices are held fixed.
The final publication is available at Springer via http://dx.doi.org/10.1007/s11129-008-9047-7
product assortment decisions, multi-product firms, discrete games
Draganska, M., Mazzeo, M. J., & Seim, K. (2009). Beyond Plain Vanilla: Modeling Joint Product Assortment and Pricing Decisions. Quantitative Marketing and Economics, 7 (2), 105-146. http://dx.doi.org/10.1007/s11129-008-9047-7
Date Posted: 27 November 2017
This document has been peer reviewed.