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Homogenous products are considered to be homogenous when they are perfect substitutes and buyers perceive no actual or real differences between the products offered by different firms.

Price is the single most important dimension along which firms producing homogenous products compete.

However, empirical experience demonstrates that when the number of such firms is few, the existence of homogenous products may facilitate collusion. In various jurisdictions, collusive arrangements have been found to exist in homogenous products such as cement, flour, steel and sugar.

In contrast, heterogeneous products differ significantly from each other and are not easily substitutable.

Source Publication:
Glossary of Industrial Organisation Economics and Competition Law, compiled by R. S. Khemani and D. M. Shapiro, commissioned by the Directorate for Financial, Fiscal and Enterprise Affairs, OECD, 1993.


Statistical Theme: Financial statistics

Created on Thursday, January 3, 2002

Last updated on Wednesday, January 4, 2006