Product Differentiation, Competitive Toughness, and Intertemporal Substitution
构建了一个动态垄断竞争模型，发现产品差异化对市场结果的影响取决于跨期替代弹性，产品差异化本身不能作为竞争强度的有效指标。
Abstract Standard measures of competitive toughness fail to capture the fact that, as consumers optimize intertemporally, firms operating today compete with (as yet non‐existent) businesses, which will be started tomorrow. We develop a two‐tier constant elasticity of substitution (CES) model of dynamic monopolistic competition in which the impact of product differentiation on the market outcome depends crucially on the elasticity of intertemporal substitution (EIS). The degree of product differentiation per se fails to serve as a meaningful indicator of competitive toughness: what matters is its cross‐effect with EIS. We also extend the model to the case of non‐CES preferences in order to capture variable mark‐ups.