Strategic Product Variety Choice: Theory and Empirical Evidence

Ulrich Kaiser, Markus Reisinger

Publikation: KonferencebidragPaperForskningpeer review

Abstrakt

We investigate theoretically and empirically how firms choose their product variety in response to changes in the market environment. We consider a model in which firms decide on the optimal number of products and on the optimal investment in quality. The interplay between these two choices yields to novel predictions on how market conditions shape a firm’s product variety. We find that higher revenue per consumer leads to a reduced number of products, whereas an increase in the number of competitors or a larger share of loyal consumers induces firms to expand their product variety. Using data from the German magazine industry, we find supportive evidence for these predictions.
OriginalsprogEngelsk
Publikationsdato2019
Antal sider40
StatusUdgivet - 2019
BegivenhedDRUID19 Conference - Copenhagen Business School, Frederiksberg, Danmark
Varighed: 19 jun. 201921 jun. 2019
Konferencens nummer: 41
https://conference.druid.dk/Druid/?confId=59

Konference

KonferenceDRUID19 Conference
Nummer41
LokationCopenhagen Business School
LandDanmark
ByFrederiksberg
Periode19/06/201921/06/2019
Internetadresse

Emneord

  • Product variety
  • Quality investment
  • Consumer loyalty
  • Consumer heterogeneity
  • Price competition
  • Magazine industry

Citationsformater