Monopoly,product differentiation and economic welfare |
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Authors: | Motoshige Itoh |
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Affiliation: | Faculty of Economics, University of Tokyo, Tokyo 113, Japan |
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Abstract: | This paper discusses the pricing behavior of a monopolistic producer supplying several quality-differentiated goods by using a model of a Lancasterian characteristic approach with consumer's taste pattern dispersed. It examines how finer product differentiation, which is made by the producer by means of the introduction of a new good, changes the price structure and consumer's welfare. It will be establised that the entry of a new good imposes quite different impacts on the price of the goods of higher quality and on those of lower-quality goods. |
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