The provision of convenience and variety by the market

Research output: Contribution to journalArticleScientificpeer-review

8 Citations (Scopus)

Abstract

Consumers commonly face purchasing costs, e.g., travel- or wait-time, that are fixed to quantity but increase with variety. This article investigates the impact of such costs on the demand and supply of variety. Purchasing costs limit demand for variety like prices limit demand for quantity. When demand for variety is low, manufacturers generally invest substantially in lowering purchasing costs, to attract consumers. In the monopolistic competition free-entry equilibrium, providing convenience increases the demand for variety, but its costs reduce supply. The desirability of non-price competition in convenience and its implications for variety and market concentration are discussed
Original languageEnglish
Pages (from-to)480-498
JournalRAND Journal of Economics
Volume46
Issue number3
Early online date22 Jul 2015
DOIs
Publication statusPublished - Oct 2015

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