Review of Industrial Organization

, Volume 52, Issue 1, pp 85–100 | Cite as

Product Similarity and Cross-Price Elasticity

Article

Abstract

We use a spatial competition model to show how an increasing similarity between two products can monotonically increase, monotonically decrease, or have a non-monotonic effect on cross-price elasticity. We relate these results to prior research that links cross-price elasticity to product similarity, and the literature on market structure, merger analysis, and price discrimination.

Keywords

Cross-price elasticity Product similarity Spatial competition 

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Copyright information

© Springer Science+Business Media, LLC 2017

Authors and Affiliations

  1. 1.The Paul Merage School of BusinessUniversity of California IrvineIrvineUSA

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