Commentary on “Pricing Prototypical Products”

The article by Amaldoss and He [Amaldoss W, He C (2013) Pricing prototypical products. Marketing Sci. 32(5):733–752] investigates how prototypicality changes the competitive behavior of firms in a horizontally differentiated market. Their study extends the spokes model by considering the asymmetry between the prototypical and nonprototypical products in terms of the probabilities of being included in consumers’ consideration sets. Their analyses show that when consumer valuations are low (moderately high), the prototypical product charges a lower (higher) price than a nonprototypical product. However, the asymmetric probabilities are overlooked when characterizing the demand for the prototypical product. With the correct demand function, we show that whether the prototypical product is priced lower depends on consumer valuations as well as the level of prototypicality, and the prototypical product can charge a lower price even when consumer valuations are moderately high. One should use extra caution when characterizing demands in the spokes model with asymmetric probabilities.