Strategic product variety and quality choice

We examine the linkages between strategic product assortment, quality choice, and pricing by multi-product firms as well as the welfare effects from those linkages. The analysis shows that strategic effects can lead to relevant inefficiencies. Specifically, the analysis identifies effects which can induce insufficient or excessive product quality relative to the socially optimal level of quality. •We examine the linkages between strategic product assortment, quality choice, and pricing by multi-product firms as well as the welfare effects from those linkages.•The analysis shows that strategic effects can lead to relevant inefficiencies.