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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/38952
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| Title: | | Hotelling competition with multi-purchasing: Time Magazine, Newsweek, or both?  |
| Authors: | | Anderson, Simon P. Foros, Øystein Kind, Hans Jarle |
| Issue Date: | | 2010 |
| Series/Report no.: | | CESifo working paper Industrial Organisation 3096 |
| Abstract: | | Equilibrium prices behave quite differently if consumers single-purchase (buy either Time Magazine or Newsweek) or if some consumers multi-purchase (buy both). Prices are strategic complements under single-purchase, and increase with magazine quality. In a multi-purchase regime prices are strategically independent because firms then act monopolistically by pricing the incremental benefit to marginal consumers. Furthermore, prices can decrease with magazine quality due to overlapping content. Higher preference heterogeneity increases prices and profits in equilibrium with single-purchase, but decreases them with multi-purchase. We determine when each regime holds, and present a detailed reaction function analysis which applies more generally to duopoly pricing. |
| Subjects: | | magazine competition multi-purchase incremental pricing content competition |
| JEL: | | L13 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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