Product Differentiation, Degree Of Business Cooperation

Competition and cooperation are important section in the theory of industrial organization. The influence that product differentiation works on cooperation is a quick developmental field. Product differentiation and time-series are the two important issue faced by it, which origin from Bertrand-paradox.The continuous argument about Bertrand-paradox offered a lot of tools and background knowledge for further analysis in this question. Based on the retrospect and review of existent literature, spatial monopolization and rival strategy are accepted but the angle discussing the effect that product differentiation works on cooperation will be changed from producer. By re-constructing function of consumer utility and introducing in consumer preference, the degree of product differentiation may be denoted by the degree of consumer preference. The influence that product differentiation works on critical discount factor d can be obtained by introducing in one-shot price game and repeated game, from which we can learn the influence that product differentiation works on cooperation. Price and transport cost are not the only factor determining the purchase by introducing in the utility function. So, the choices to goods are not absolutely determined by the location. Also, that can lead to the unsymmetry in price and market share among enterprises. Furthermore, this article analyze the precondition of depreciation, the optimal expanding multiplier K, the price of cooperation and relationship between them, the influence that various variable work on d. Some extreme case will be benefit to illuminate the topic.Introducing in the utility function provide an efficient tool for the analyzing the influence that product differentiation works on cooperation. But it has its limitation, such as that three enteiprise will increase the difficulty of analysis. Unanimous of consumer preference and completeness in product information still deserved to be discussed.