A model of multiproduct price competition

Yair Tauman*, Amparo Urbano, Junichi Watanabe

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

We provide a simple model of price competition in a multiproduct oligopoly market. The products are of general nature. We find that a pure strategy equilibrium exists and every equilibrium consumption maximizes the total social surplus. Consumers are characterized by a set function which determines their willingness to pay for every subset of products. If this function is convex, the set of equilibrium prices coincides with the core of a cooperative game generated by this set function and the firms extract total industry surplus. If it is concave, the only equilibrium price of a product is its marginal contribution to the consumer's total willingness to pay.Journal of Economic LiteratureClassification Numbers: C72, D21, D41, D43, L13.

Original languageEnglish
Pages (from-to)377-401
Number of pages25
JournalJournal of Economic Theory
Volume77
Issue number2
DOIs
StatePublished - Dec 1997

Funding

FundersFunder number
D.G.I.C.Y.T.PB93-0684

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