Essays in modelling entry decisions in differentiated product markets

Abstract

This dissertation focuses on product introduction decisions by multiproduct firms in differentiated product markets. The analysis is applied to the Spanish car market in the 1990's. The dissertation is organized in four chapters. Chapter One provides an introduction to the problem and a summary of the dissertation. Chapter Two provides a descriptive analysis of the Spanish automobile market during the 1990's, which is characterized by high entry rates. Chapter Three approaches the problem of entry from a static point of view. The results con rm the positive relation be- tween entry and profitability and show that firms prefer to introduce their products in segments where the variability of profits is smaller. Chapter Four approaches the problem of entry using a dynamic oligopoly model of competition between multi- product firms. The main result is that firms have incentives to product proliferation due to the existence of important economies of scope in product entry costs