Multiproduct Quality Competition: Fighting Brands and Product Line Pruning

Jun 2002 | 105

Authors: David P. Myatt, Justin P. Johnson, Johnson Graduate School of Management, Cornell University

Firms selling multiple quality-differentiated products frequently alter their product lines when a competitor enters the market. We present a model of multiproduct monopoly and duopoly using a general `upgrades` approach that yields a powerful analytical framework. We provide a simple theoretical explanation for the common strategies of using `fighting brands` and of product line `pruning`. We also present a general condition that guarantees that a monopolist will forsake market segmentation opportunities and sell but a single product. A number of previously studied issues can be addressed by our model, including inter-temporal price discrimiation and `damaged goods`.

JEL Codes: D420, D430, L110, L150, L630

Keywords: multiproduct quality competition, fighting brands, product line pruning, focus on quality, price discrimination

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