Long Tail in electronic markets: Research on competition between niche products and featured products

The emergence of Long Tail in electronic markets illuminates that niche and obscure products which previously sold very little can make up a significant share of total sales. We build a circle city model with horizontal product differentiation to describe the electronic market involving niche products and a featured product. With the model, we analyze the competition between niche products and a featured product. The analytical results demonstrate that it can enhance the consumers' utilities by adopting niche products into the electronic market, and the search cost has an important impact on niche product sales.