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Anderston, Simon P.
de Palma, Andre
Year of Publication: 
Series/Report no.: 
Discussion Paper No. 973
Thie paper proves the existence of a symmetric equilibrium with multiproduct firms using a nested logit model of demand. The demand model is parametrized by two variable which characterize different dimensions of preference variety. These reflect intragroup heterogeneity and intergropu heterogeneity, a group (or nest) being the set of products produced by a firm. There are then two dimensions to market performance; the total number of firms and the range of products produced per firm. It is shown that the market equilibrium involves an excessive number of firms, but each firm provides too few products.
Discrete choice model
oligopolistic competition
multiple product firms
nested logit model
Document Type: 
Working Paper

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