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A Model of Product Proliferation with Multiproduct Firms
Ruth S. Raubitschek
The Journal of Industrial Economics
Vol. 35, No. 3 (Mar., 1987), pp. 269-279
Published by: Wiley
Stable URL: http://www.jstor.org/stable/2098634
Page Count: 11
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This paper presents a model of product proliferation by multiproduct firms. Firm behavior is based on a two stage process, in which there is centralized decision making in new product introductions and decentralized management of existing products. In equilibrium, the number of products each firm has, as well as its total profits, are inversely related to the cost of introducing a new product and to the number of firms in the market. But, as the number of rivals increases, the total number of products in the market increases, although total industry profits decrease.
The Journal of Industrial Economics © 1987 Wiley