Publication at Faculty of Social Sciences, Faculty of Mathematics and Physics, Centre for Economic Research and Graduate Education |
2015
Abstract
We characterize the product line choice and pricing of a monopolist from the upper envelope of net marginal revenue curves to the individual product demand functions. The equilibrium product line constitutes those varieties yielding the highest upper envelope.
In a generalized vertical differentiation framework, the equilibrium line is exactly the same as the first-best socially optimal line. These upper envelope and first-best optimal line findings extend to symmetric Cournot oligopoly.