Weassumealinearimpactofpricesanddecreasingreturnsinproductvarietyon demand as in Gasmi, Laffont, andVoung (1992).The nonlinearity inproduct variety also ensures identification of the simultaneous econometric equation system (see Gasmi, Laffont, and Vuong, 1992; Kadiyali, 1996). Decreasing returns in product variety are the necessary condition for parameter identification in all subsequently discussed competitive conditions. The general demand function of both brands is characterized as