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Intermediate product versioning

Author

Listed:
  • Cao, Wuyi
  • Chen, Meichen
  • Li, Youping

Abstract

The strategic creation and management of multiple product versions are frequently utilized to exploit heterogeneous buyers. This paper examines the versioning of an intermediate product when downstream retailers compete in the consumer market. Our analysis demonstrates a departure from conventional wisdom in final product markets: versioning an intermediate product reduces the profit of the upstream firm. This reduction occurs as the market power of the retailers is enhanced, leading to a decline in consumer and total welfare.

Suggested Citation

  • Cao, Wuyi & Chen, Meichen & Li, Youping, 2024. "Intermediate product versioning," Economics Letters, Elsevier, vol. 238(C).
    • Handle: RePEc:eee:ecolet:v:238:y:2024:i:c:s0165176524002143
    DOI: 10.1016/j.econlet.2024.111731
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Versioning; Intermediate product; Welfare;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • M3 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising

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