| Author: | Yuan, L. |
| Title: | Product differentiation, strategic divisionalization, and persistence of monopoly |
| Journal: | Journal of Economics and Management Strategy
1999 : WINTER, VOL. 8:4, p. 581-602 |
| Index terms: | Oligopoly Monopoly Competition Product differentiation Strategy Models |
| Language: | eng |
| Abstract: | This paper analyzes the strategic incentive of oligopolists to create autonomous rival divisions when products are differentiated. Considered is a 2-stage game where firms choose the number of autonomous divisions in the first stage and all the divisions engage in Cournot competition in the second. It is shown among others that product differentiation ensures the existence of an interior subgame perfect Nash equilibrium (SPNE), and the equilibrium number of divisions increases with the degree of substitution among products and the number of firms. |
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