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On price competition with complementary goods
Authors:Jean Gabszewicz  Nathalie Sonnac  Xavier Wauthy  
Abstract:We consider a duopoly industry with two separate firms each selling an indivisible product. The joint consumption of these goods has a specific value for the consumers which exceeds the mere addition of utilities when products are consumed in isolation: the higher this excess, the larger the complementarity between the goods. We analyse price equilibria in this market as related to the degree of complementarity existing between the two products.
Keywords:Complements  Price competition  Quality
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