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Article

Product line design

Journal of Economic Theory . 2015. Vol. 157. P. 517-526.
Anderson S. P., Celik L.

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.