Consider a market in which consumer indifference curves are relatively steep. Firms in this industry are pursuing

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Consider a market in which consumer indifference curves are relatively steep. Firms in this industry are pursuing two positioning strategies: Some firms are producing a basic product that provides satisfactory performance; others are producing an enhanced product that provides performance that is superior to that of the basic product. Consumer surplus parity currently exists in the industry. Are the prices of the basic and the enhanced product likely to be significantly different or about the same? Why? How would the answer change if the consumer indifference curves were relatively flat?
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Economics of Strategy

ISBN: 978-1118319185

6th edition

Authors: David Besanko, David Dranove, Mark Shanley, Scott Schaefer

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