The option of joint purchase in vertically differentiated markets

Jaskold Gabszewicz, Jean;Wauthy, Xavier
(2003) Economic Theory — Vol. 22, n° 4, p. 817-829 (2003)

Files

pdfdocument.pdf
  • Open Access
  • Adobe PDF
  • 1.32 MB
Download

Details

Authors
Abstract
Within the framework proposed by Mussa and Rosen (1978) for modelling quality differentiation, we allow consumers to buy simultaneously different variants of the same indivisible good. We call this the "joint purchase option". We show that this option dramatically affects price competition: while a unique equilibrium always prevails when consumers are assumed to make mutually exclusive purchases, either uniqueness, or multiplicity, or absence of price equilibrium arise when the joint purchase option is opened depending on the utility attached to joint purchase relative to separate purchases.
Affiliations

Citations

  • APA
  • Chicago
  • FWB

Jaskold Gabszewicz, J., & Wauthy, X. (2003). The option of joint purchase in vertically differentiated markets. Economic Theory, 22(4), 817-829. https://doi.org/10.1007/s00199-003-0359-2 (Original work published 2003)