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The Optimal Product-Mix for a Monopolist in the Presence of Congestion Effect: A Model and Some Results

Chander, Parkash and Leruth, Luc (1988) The Optimal Product-Mix for a Monopolist in the Presence of Congestion Effect: A Model and Some Results. Social Science Working Paper, 673. California Institute of Technology , Pasadena, CA. (Unpublished)

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The paper develops a model of product differentiation in which the quality of a product may be negatively affected by the number of consumers buying it, as it is the case for any good affected by congestion. It is shown that for any positive degree of heterogeneity among the consumers, a monopolist will always find it more profitable to differentiate, i.e., to sell more than one quality of the product at different prices.

Item Type:Report or Paper (Working Paper)
Additional Information:We thank P. Dubey and J. Sutton for their comments on an earlier draft of this paper. We also thank Victor Gins burgh for helpful discussion. Financial support by "Project d' Action Concertéo" under contract no. 84-89/65 is gratefully acknowledged by the second author. Published as Chander, Parkash, and Luc Leruth. "The optimal product mix for a monopolist in the presence of congestion effects: A model and some results." International Journal of Industrial Organization 7, no. 4 (1989): 437-449.
Group:Social Science Working Papers
Series Name:Social Science Working Paper
Issue or Number:673
Record Number:CaltechAUTHORS:20170906-144753357
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:81209
Deposited By: Jacquelyn Bussone
Deposited On:06 Sep 2017 22:04
Last Modified:03 Oct 2019 18:40

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