BROWSE

Parity Product

Definition

A parity product is a product category or group of categories where the several brands within that category possess functionally equivalent attributes, making one brand a satisfactory substitute for most other brands in that category. It is a product or service that satisfies the need of a consumer that another product or service fulfills.

What is 'Parity Product'

A brand of good that has enough similarities with other brands of the same good type that it is considered readily substitutable. A parity product is functionally equivalent to a product offered by a competitor. The existence of parity products means that a monopoly does not exist. Toothpaste or contact lens solution could be considered parity products.

Explaining 'Parity Product'

A business selling a parity product will in most cases be unable to command premium pricing because of the substitution effect. If the business raises its price while competitors do not raise theirs, consumers will buy less of its product and instead purchase competing products. In this sense, the cross elasticity of demand for the competing goods will be positive, since an increase in price of one brand's good will result in an increase in demand for another brand's good.


Further Reading


Purchasing power parity
www.nber.org [PDF]
… Thus defined 'purchasing power parity' deserves attention, even though it is not always an accurate forecaster of the foreign … Ih the world market for the products of a particular industry the relative price of domestic and foreign variants of the product is determined by …

Risk parity portfolio vs. other asset allocation heuristic portfoliosRisk parity portfolio vs. other asset allocation heuristic portfolios
joi.pm-research.com [PDF]
… Thus defined 'purchasing power parity' deserves attention, even though it is not always an accurate forecaster of the foreign … Ih the world market for the products of a particular industry the relative price of domestic and foreign variants of the product is determined by …

Purchasing power parity tests in cointegrated panelsPurchasing power parity tests in cointegrated panels
www.mitpressjournals.org [PDF]
… Thus defined 'purchasing power parity' deserves attention, even though it is not always an accurate forecaster of the foreign … Ih the world market for the products of a particular industry the relative price of domestic and foreign variants of the product is determined by …

The purchasing power parity puzzleThe purchasing power parity puzzle
www.jstor.org [PDF]
… Thus defined 'purchasing power parity' deserves attention, even though it is not always an accurate forecaster of the foreign … Ih the world market for the products of a particular industry the relative price of domestic and foreign variants of the product is determined by …

Currency valuation and purchasing power parityCurrency valuation and purchasing power parity
papers.ssrn.com [PDF]
… Thus defined 'purchasing power parity' deserves attention, even though it is not always an accurate forecaster of the foreign … Ih the world market for the products of a particular industry the relative price of domestic and foreign variants of the product is determined by …

The purchasing-power parity doctrine: a reappraisalThe purchasing-power parity doctrine: a reappraisal
www.journals.uchicago.edu [PDF]
… Thus defined 'purchasing power parity' deserves attention, even though it is not always an accurate forecaster of the foreign … Ih the world market for the products of a particular industry the relative price of domestic and foreign variants of the product is determined by …

Does the nominal exchange rate regime affect the real interest parity condition?Does the nominal exchange rate regime affect the real interest parity condition?
www.sciencedirect.com [PDF]
… Thus defined 'purchasing power parity' deserves attention, even though it is not always an accurate forecaster of the foreign … Ih the world market for the products of a particular industry the relative price of domestic and foreign variants of the product is determined by …

Parity pricing and its critics: A necessary condition for efficiency in the provision of bottleneck services to competitorsParity pricing and its critics: A necessary condition for efficiency in the provision of bottleneck services to competitors
heinonline.org [PDF]
… Thus defined 'purchasing power parity' deserves attention, even though it is not always an accurate forecaster of the foreign … Ih the world market for the products of a particular industry the relative price of domestic and foreign variants of the product is determined by …

Testing purchasing power parity for Japan and the US: A structural-break approachTesting purchasing power parity for Japan and the US: A structural-break approach
www.sciencedirect.com [PDF]
… Thus defined 'purchasing power parity' deserves attention, even though it is not always an accurate forecaster of the foreign … Ih the world market for the products of a particular industry the relative price of domestic and foreign variants of the product is determined by …