Cost Variations in a Dierentiated Good Oligopoly

In the homogenous good case the impact of a marginal cost variation on consumer surplus, industry profits and social surplus was studied in extensive manner. Assuming quantity competition and a standard quadratic utility this paper carries on this analysis in a dierentiated good context. In contrast to the homogenous good case consumers are better o in case of a mean preserving cost variation increasing the variance of marginal costs. In the dierentiated good context producer surplus as well as consumer surplus increases with the variance of marginal costs.