Differentiated Products Allow Firms to Charge Higher Prices, Hurting Consumers
The article looks at how competition between companies in the same market is affected by how similar or different their products are. The researchers studied motels along U.S. highways to see how market concentration and product differences impact competition. They found that companies benefit more when they offer unique products, as competition is less intense when products are different. Even though prices drop when there's competition, the effect is smaller when the products are not direct competitors. So, having different products is a smart choice for companies because it leads to less fierce competition.