Product line competition in vertically differentiated markets

The paper studies the competition between identical firms each supplying a range of products of different quality. The results obtained capture many features which seem to characterise these industries: firms compete ''head-to-head'', by matching exactly each other's product line; they may leave ''holes'' in the product line (not due to the existence of fixed costs). Entry of new firms determines a reduction in the number of varieties available. The paper ends with an interpretation of the model in terms of international trade.