Fuzzy products

• Autores: Anthony Heyes, Steve Martin
• Localización: International journal of industrial organization, ISSN 0167-7187, Vol. 45, Nº. 0, 2016, págs. 1-9
• Idioma: inglés
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• Resumen

  • Abstract A fuzzy product (FP) has characteristics specified only imprecisely at time of sale. Building fuzziness into its product gives a firm flexibility to exploit favorable supply opportunities that arise between sale and delivery, and so reduce expected costs. While increased competition reduces price, the effect on fuzziness is ambiguous. Socially-optimal fuzziness is characterized. Firms provide goods that are too fuzzy compared to first-best, though entry serves to correct this inefficiency for certain types of goods. Considering competition with a niche good, a FP sells for a lower price, although it captures a larger market share and is more profitable.