PRODUCT LINE RIVALRY WITH BRAND DIFFERENTIATION

Competition with product rivalry is examined in a model where products are differentiated by both quality and brand name. With no commitment, firms produce a full product line. When firms can commit to restrict their product offerings, firms specialize if the degree of brand-specific differentiation is small, and they produce a full product line if brand-specific differentiation is large relative to intra-firm differentiation. Firms may crowd a product space when all competitors would be better off with specialization. Brand proliferation is a credible entry-deterring strategy if the degree of brand-specific differentiation is not too large.