Specialization, Generic Firms and Market Competition

29 Pages Posted: 28 Sep 2018 Last revised: 26 Jan 2019

See all articles by Mark Lijesen

Mark Lijesen

VU University Amsterdam

Carlo Reggiani

University of Manchester

Date Written: January 1, 2019

Abstract

The choice of specialization affects firms' brand perception by consumers and it is of crucial importance for their profitability in competitive markets. We model how firms choose specialization through a spatial non-localized competition framework that naturally allows for markets where not all brands are available. The model predicts the co-existence of generic and specialized firms, a feature common to many markets but very rare in modeling endogenous product differentiation. Our analysis also provides general results on firms' pricing and evaluates the sensitivity of the co-existence of generic and specialized firms to a number of assumptions.

Keywords: Specialization, Optimal Location, Spokes Model

JEL Classification: D43, L11, L13

Suggested Citation

Lijesen, Mark and Reggiani, Carlo, Specialization, Generic Firms and Market Competition (January 1, 2019). Available at SSRN: https://ssrn.com/abstract=3246996 or http://dx.doi.org/10.2139/ssrn.3246996

Mark Lijesen

VU University Amsterdam ( email )

De Boelelaan 1105
Amsterdam, ND North Holland 1081 HV
Netherlands

Carlo Reggiani (Contact Author)

University of Manchester ( email )

Oxford Road
Manchester, N/A M13 9PL
United Kingdom

HOME PAGE: http://https://sites.google.com/view/carloreggianieconomics/home

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