Multiproduct firms: Uniqueness of equilibrium, investment in variety, and welfare

Thomas Favory

doi:10.26182/n0jn-xr79

Multiproduct firms: Uniqueness of equilibrium, investment in variety, and welfare

Thomas Favory

Research output: Thesis › Doctoral Thesis

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Abstract

This thesis finds that the price equilibrium with multiproduct firms exists and is unique if, for each product, consumers' valuations follow a strictly log-concave distribution. Moreover, if this distribution has an unbounded hazard rate, firms engage in Bertrand competition as they increase their product variety. In that case, firms avoid investing simultaneously in new products, and the effect of variety on welfare is ambiguous. In contrast, if the distribution is a double exponential, the hazard rate is bounded. Firms simultaneously invest in new products and welfare increases to the benefit of consumers.

Original language	English
Qualification	Doctor of Philosophy
Awarding Institution	The University of Western Australia
Supervisors/Advisors	Fiorini, Luciana, Supervisor Wu, Yanrui, Supervisor
Thesis sponsors	Australian Government Research Training Program
Award date	7 Oct 2021
DOIs	https://doi.org/10.26182/n0jn-xr79
Publication status	Unpublished - 2021

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THESIS - DOCTOR OF PHILOSOPHY - FAVORY, Thomas - 2021
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Cite this

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AB - This thesis finds that the price equilibrium with multiproduct firms exists and is unique if, for each product, consumers' valuations follow a strictly log-concave distribution. Moreover, if this distribution has an unbounded hazard rate, firms engage in Bertrand competition as they increase their product variety. In that case, firms avoid investing simultaneously in new products, and the effect of variety on welfare is ambiguous. In contrast, if the distribution is a double exponential, the hazard rate is bounded. Firms simultaneously invest in new products and welfare increases to the benefit of consumers.

KW - industrial organization

KW - microeconomic theory

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DO - 10.26182/n0jn-xr79

M3 - Doctoral Thesis

ER -

Multiproduct firms: Uniqueness of equilibrium, investment in variety, and welfare

Abstract

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