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Salience and Horizontal Differentiation

journal contribution
posted on 2022-06-28, 09:18 authored by R Emre Aytimur

I study a horizontal differentiation model in which one of two attributes of a product, product fit and price, is more salient for a consumer than the other and different consumers can find a different attribute salient. The attribute that is more salient is determined by relative differences between the two products and is determined endogenously as a result of firms' pricing strategies. High (low) marginal costs soften (toughen) price competition between firms. Pass-through rates are greater than 1 for some parameter values. Both industry- and firm-level cost increases may be beneficial for firms.

History

Author affiliation

School of Business, University of Leicester

Version

  • AM (Accepted Manuscript)

Published in

Canadian Journal of Economics

Volume

56

Issue

1

Pagination

60-86

Publisher

Wiley

issn

0008-4085

Acceptance date

2022-04-22

Copyright date

2022

Available date

2025-01-25

Language

en

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