The monopolist’s incentives towards product proliferation are evaluated in an optimal control model considering three alternative regimes: profit-seeking; social planning; and a hybrid case with monopoly pricing and a regulator setting product innovation to maximise welfare. In equilibtium, the profit-seeking firm supplies a socially suboptimal number of varieties to reduce cannibalisation while the social planner exploits the same effect to satisfy consumers’ love for variety and decrease the market price of all products. In terms of the Schumpeter vs Arrow debate on the relationship between market structure and innovation incentives, the results obtained in this model have a definite Arrovian flavour.

L. Lambertini (2009). Optimal Product Proliferation in Monopoly: A Dynamic Analysis. THE REVIEW OF ECONOMICS ANALYSIS, 1, 80-97.

Optimal Product Proliferation in Monopoly: A Dynamic Analysis

LAMBERTINI, LUCA
2009

Abstract

The monopolist’s incentives towards product proliferation are evaluated in an optimal control model considering three alternative regimes: profit-seeking; social planning; and a hybrid case with monopoly pricing and a regulator setting product innovation to maximise welfare. In equilibtium, the profit-seeking firm supplies a socially suboptimal number of varieties to reduce cannibalisation while the social planner exploits the same effect to satisfy consumers’ love for variety and decrease the market price of all products. In terms of the Schumpeter vs Arrow debate on the relationship between market structure and innovation incentives, the results obtained in this model have a definite Arrovian flavour.
2009
L. Lambertini (2009). Optimal Product Proliferation in Monopoly: A Dynamic Analysis. THE REVIEW OF ECONOMICS ANALYSIS, 1, 80-97.
L. Lambertini
File in questo prodotto:
File Dimensione Formato  
Optimal product proliferation in monopoly.pdf

accesso aperto

Tipo: Versione (PDF) editoriale
Licenza: Creative commons
Dimensione 195.09 kB
Formato Adobe PDF
195.09 kB Adobe PDF Visualizza/Apri

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11585/85115
Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus ND
  • ???jsp.display-item.citation.isi??? ND
social impact