Economic Analyzing On Product Differentiation

The most important achievements from the 20 years'reform may be the fact that generally we have got rid of the shortage and have formed a buyers'market. With this background, it has been demanded that the companies implement the product differentiation strategy. This strategy can have obvious effect on the social welfare as well as on the market itself. Consequently, it is of both practical and theoretical value to identify its connotation and causes, to compare the industries where it exists and analyze its effect on the social welfare. With these foundations, I study the types and degree of the possible negative effect caused by the product differentiation.This dissertation is made up of eight sections. After the first section, which is the introduction, I discuss the categories and types of product differentiation in the second section. In this section I termed the product differentiation as the fact that the similar products from different competing enterprises are not substitutable completely due to the differences in the physical attributes, the service, the information provision and consumer preference etc.The third section is mainly about the emergence mechanism of product differentiation. In this section I analyze, in the angle of demand, how the sales effort of the enterprises can lead to product differentiation. In this problem I emphasize the advertisement.But when we change the angle to the supply side, research and development should be considered. According to Schumpeter, in the long run, competing through the introduction of new product and new process is far more important than through price. And it is just the R&D, whose direct objects are to seek new process and new product, and other innovative activities in the enterprises that put the economy forward. In this section, my conclusion is that there are two drive forces behind the...