The Logit Model of Monopolistic Competition: Brand Diversity
用逻辑模型刻画品牌差异化，发现垄断竞争均衡下品牌数量少于消费者最优水平，支持对称差异化模型的结论。
One of the important issues in the literature on monopolistic competition concerns whether the free entry equilibrium will provide sufficient variety of differentiated brands. This paper examines variety issue using the logit choice model to capture brand differentiation. The consumption value of each brand is drawn from the extreme value distribution, and the consumer then purchases the brand with the highest value. With the resulting demand structure, the authors' find that monopolistic competition results in two few firms and, thus, too few brands from the viewpoint of consumers. This result supports the findings of other models with symmetrically differentiated brands. Copyright 1990 by Blackwell Publishing Ltd.