Consumer influence on product variety decisions

In this paper, we study how the heterogeneous consumer valuation of product quality influences the firm´s product variety decisions, i.e. (a) the product variety in a product line; (b) the quality of every individual product; and (c) the product prices. First we consider in our analysis a simple uniform consumer valuation distribution (CVD). Then we shift to more complex CVDs such as the triangular and Weibull-based consumer valuation distributions which could represent a wide range of CVDs e.g. discount store customers to luxury store customers.