Unformatted text preview: t a lack of product
differentiation (“homogeneous good”) leads to price taking behavior or loss of market power. Hence, one way to have
some market power is by physical product differentiation (for example, the different types of hotels in the Starwood and
Marriott chain). However, from consumer theory we know that identical products may be perceived differently (the
linear utility model says that the consumer perceives goods to be the same, not that the goods are the same). Thus, even
1 Thanks: Asad Priyo, Adam Michael Lavecchi, Francesca’s Crosstown Rebels Mix, and especially Akber Nafeh for typing practice problems and solutions. For
feedback, comments and typos please e-mail [email protected] Note to self: (1) Look at Ken Corts’ cereal product proliferation case as an example of product
differentiation and proliferation and bring this topic back into 204 lectures, (2) Do empire building (3) Do entry deterrence pricing (4) Do R and profit max over time
with inventory levels (look at Maynard Wire Company case and maybe use it as a project).
2 Review and as measures of market structure
1 ECO 204 Chapter 16...
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