Strategic Product Variety Choice: Theory and Empirical Evidence

Ulrich Kaiser, Markus Reisinger

Research output: Contribution to conferencePaperResearchpeer-review


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.
Original languageEnglish
Publication date2019
Number of pages40
Publication statusPublished - 2019
EventDRUID19 Conference - Copenhagen Business School, Frederiksberg, Denmark
Duration: 19 Jun 201921 Jun 2019
Conference number: 41


ConferenceDRUID19 Conference
LocationCopenhagen Business School
Internet address


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

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