Download or read book Multi-Product Price and Assortment Competition written by Awi Federgruen and published by . This book was released on 2014 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: We address a generic price competition model in an industry with an arbitrary number of competitors, each offering all or a subset of a given line of N products. The products are substitutes in the sense that the demand volume of each product weakly increases whenever the price of another product increases. The cost structure is linear, with arbitrary cost rates.Our demand model is the unique regular extension of a set of demand functions that are affine in a limited polyhedral subset of the price space. A set of demand functions is regular if it satisfies the following conditions: under any given price vector, when some product is priced out of the market, i.e., has zero demand, any increase of its price has no impact on the demand volumes. Depending on the set of prices selected by the competing firms, a different product assortment is offered on the market.We characterize the equilibrium prices, product assortment and sales volumes in the price competition model, under this demand model. Under minimal conditions, we show that a pure Nash equilibrium always exists; while multiple price equilibria may arise, they are equivalent in the sense of generating an identical product assortment and sales volumes.