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Product Line Choice in Retail Duopoly

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  • Rafael Moner‐Colonques
  • José J. Sempere‐Monerris
  • Amparo Urbano

Abstract

This paper develops a successive duopoly model to identify conditions under which differentiated retailers that compete in quantities, when deciding on the range of brands to offer, will carry overlapping product lines. They will do so when retail margins on each brand are not too asymmetric. Otherwise, the less profitable brand is foreclosed from the market. It is shown that welfare increases if the upstream industry is perfectly competitive, even though fewer brands may be sold. With price competition though, exclusive dealing arises when retailers are not too differentiated and in‐store competition is sufficiently intense.

Suggested Citation

  • Rafael Moner‐Colonques & José J. Sempere‐Monerris & Amparo Urbano, 2011. "Product Line Choice in Retail Duopoly," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 20(3), pages 777-802, September.
    • Handle: RePEc:bla:jemstr:v:20:y:2011:i:3:p:777-802
    DOI: 10.1111/j.1530-9134.2011.00305.x
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    References listed on IDEAS

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    1. Gilbert, Richard J. & Matutes, Carmen, 1989. "Product Line Rivalry with Brand Differentiation," Department of Economics, Working Paper Series qt1nr3k6nk, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
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    7. De Fraja, Giovanni, 1993. "Relaxing spatial competition through product line choice (or vice versa)," Regional Science and Urban Economics, Elsevier, vol. 23(4), pages 461-486, September.
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    Cited by:

    1. MANEZ, Juan A. & MONER-COLONQUES, Rafael & SEMPERE-MONERRIS, José J. & URBANO, Amparo, 2011. "Price differentials among brands in retail distribution: product quality and service quality," LIDAM Discussion Papers CORE 2011017, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    2. Chrysovalantou Milliou & Joel Sandonis, 2018. "Manufacturer Mergers and Product Variety in Vertically Related Markets," Journal of Industry, Competition and Trade, Springer, vol. 18(1), pages 1-24, March.
    3. Levent Kutlu & Alper Nakkas, 2018. "Strategic Product Line Choice Under Asymmetric Demand Structure," The Japanese Economic Review, Springer, vol. 69(3), pages 347-359, September.
    4. Kangsik Choi, 2022. "Delegation in multiproduct downstream firms with heterogeneous channels," Journal of Economics, Springer, vol. 135(1), pages 75-102, January.
    5. Cong Pan, 2016. "Retailer’s product line choice with manufacturer’s multichannel marketing," ISER Discussion Paper 0976, Institute of Social and Economic Research, Osaka University.
    6. Ramon Fauli‐Oller & Joel Sandonís, 2021. "Buyer power, product assortment and asymmetric retail formats," Bulletin of Economic Research, Wiley Blackwell, vol. 73(2), pages 196-211, April.

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