Multiproduct firms and market structure: An explorative application to the product life cycle

The paper extends the standard Dixit-Stiglitz model of imperfect competition to allow for multiproduct firms, fully endogenising market structure by determining both the number of varieties per firm and the number of firms in the industry. The model is used to explore the proposition that shakeout in some industries may result in a shift from a fragmented market structure with many firms each offering a small range of products to a more concentrated equilibrium with fewer large firms each offering many products. (c) 2005 Elsevier B.V. All fights reserved.