Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

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Tuesday, September 25, 2012

Competition between Multiproduct Firms with Heterogeneous Costs

Posted by D. Daniel Sokol

Roberto Roson (Department of Economics, University Of Venice Ca Foscari) addresses Competition between Multiproduct Firms with Heterogeneous Costs.

ABSTRACT: This paper draws upon Feenstra and Ma (2007, 2008), to develop a model of asymmetric competition between multiproduct firms. The model is used to analyze how cost asymmetry affects the equilibrium, with determination of quantity/price as well as product scope per firm. By treating the number of firms as a continuous variable, the model is extended to account for the endogenous determination of the number of firms in a long-run, monopolistically competitive equilibrium, with free entry by heterogeneous firms.

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