Input Prices and Product Differentiation

Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition

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Product Upgrades and Posted Prices

We consider the dynamic pricing problem of a durable good monopolist with full commitment power, when a new version of the good is expected at some point in the future. The new version of the good is superior to the existing one, bringing a higher flow utility. If the arrival is a stationary stochastic process, then the corresponding optimal price path is shown to be constant for both versions ...

Product Market Competition and Option Prices ∗

Most firms face some form of competition in product markets. The degree of competition a firm faces feeds back into its cash flows and affects the values of the securities it issues. We demonstrate that, through its effects on stock prices, product market competition affects the prices of options on equity naturally and leads to an inverse relationship between equity returns and volatility, gen...

Product Innovations and Quality-Adjusted Prices

A striking characteristic of high-tech products is the rapid decrease of their quality-adjusted prices. Empirical studies show that the rate of decrease of QAPs is typically not constant over time; QAPs decrease rapidly at early stages of the product and then the rate of decrease tapers o®. Studies also suggest that the QAP is positively correlated with the rate of product introductions: The fa...

Copyright and Product Differentiation