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Monopolistic Dynamics with Endogenous Product Differentiation

Author

Listed:
  • Andrea Caravaggio

    (Department of Economics, University of Foggia, Largo Papa Giovanni Paolo II, I-71121 Foggia, Italy)

  • Luca Gori

    (Department of Law, University of Pisa, Via Collegio Ricci 10, I-56126 Pisa, Italy)

  • Mauro Sodini

    (Department of Law, University of Naples Federico II, I-80138 Napoli, Italy
    Department of Finance, Faculty of Economics, Technical University of Ostrava, 708 33 Ostrava, Czech Republic)

Abstract

This research considers the problem of a price-discriminating monopolist aiming at choosing output and investing in product differentiation to foster consumers perceiving products as being heterogeneous in different market segments. It then introduces bounded rationality and concentrates on the dynamic analysis showing the existence of several dynamic phenomena caused by the interaction between endogenous product differentiation and gradient dynamics. Though product differentiation can generally increase market power and profits, in this context it can generate a lack of coordination between the managers working in each segment.

Suggested Citation

  • Andrea Caravaggio & Luca Gori & Mauro Sodini, 2022. "Monopolistic Dynamics with Endogenous Product Differentiation," Mathematics, MDPI, vol. 10(3), pages 1-15, January.
    • Handle: RePEc:gam:jmathe:v:10:y:2022:i:3:p:302-:d:728157
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    References listed on IDEAS

    as
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