Should Multiple Points of Product
Differentiation Coexist?
Aydin Alptekinoglu
Decision and Information Sciences Department
The
main benefit of postponement comes from a demand pooling effect due to delayed
allocation of generic parts into end-products.
But, there is often an important downside: The longer the delay (in
differentiating the product) the narrower is the breadth of product variety
that can be produced from the generic part.
That is, longer delay enables demand pooling over a longer period of
time, but for fewer end-products. In
order to capture these two opposing forces on the pooling effect, we propose a
model that allows multiple points of product differentiation to coexist.