Product heterogeneity is introduced into the context of spatial pri ce discrimination. Many of the strong properties of the standard homogeneous goods case (which attains as a limit case here) are shown to no longer be valid. In particular, the social optimum is no longer sustainable as a market...

This paper proves the existence of a symmetric equilibrium with multiproduct firms using a nested logit model of demand. The demand model is parameterized by two variables that characterize different dimensions of preference for variety. These reflect intragroup heterogeneity and intergroup...

The authors propose a specific characteristics framework in order to construct linkages between alternative approaches to modeling product differentiation. It is shown that a demand system that satisfies the gross substitutes property imposes specific requirements on the locations of products....

The authors provide a comparison of three spatial price policies: uniform pricing, mill pricing, and spatial price discrimination. Profits, consumer surplus, and social surplus are compared in a duopoly model. Until recently, oligopoly analysis has been stalled because of nonexistence of...

This paper reconsiders the theory of market versus optimal product diversity using a discrete choice approach to product differentiation. The authors analyze oligopoly with price competition and free entry with integer firm numbers. Under the Chamberlinian symmetry assumption, they show that...

The logit discrete choice model is argued to be flexible, tractable, and intuitively sound as a demand model of product differentiation under oligopoly. The free entry equilibrium product range is greater than or less than the social optimum, depending on cost and demand conditions and the...

We analyse an oligopoly model incorporating horizontal differentiation and quality differences. High quality goods are overpriced and underproduced. When the market is fairly well covered, low quality products may be profitable when their net social contribution is negative, implying excessive...