Do firms' product lines include too many varieties?

Article Abstract:

A study using a simple model that captures the most important feature of product-line extension in an environment with shopping costs reveals that the presence of consumer shopping costs increases firms' incentives to include more varieties of products. A firm with more product line will not only generate more profits from additional products but will also steal consumers from its competitors. Product lines that are too long in the presence of shopping costs are influenced by other factors in the market.

Marketing, Business enterprises

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Product line decisions and the Coase conjecture

Article Abstract:

The Coase conjecture does not apply when a durable-goods monopolist sells nondurable goods whose demand are related to the durable goods. The monopolist reduces the rate of introducing durable goods in the market with the presence of nondurable substitutes. The incentives of the monopolist to expand his or her product line to durable or nondurable goods are examined. The effects of the entry of nondurables in the market and prospects for mergers are also explored.

Coase theorem, Nondurable goods

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Intertemporal price discrimination in frictionless durable goods monopolies

Article Abstract:

A study was conducted to demonstrate that quality and production cost differences between durable and non-durable products allow intertermporal price discrimination. Results show that a durable goods monopolist's efforts at price discrimination will lead to delays in durable goods sale, long run market efficiency and finite trading periods. Results also indicate that non-durables are maintained as a low-profit alternative in the durables market.

Wholesale Trade, Durable Goods, WHOLESALE TRADE--DURABLE GOODS, Durable Goods Wholesalers, Price discrimination

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