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T his paper addresses the strategic impact of modular design on the optimal length and price of a differentiated product line. We represent consumer demand with a Bayesian logit model. We also break operations costs into product design and production components. Our analysis shows that reducing product development costs via modular design always makes it attractive to offer greater product variety. However, reducing production costs can sometimes motivate a reduction in variety for adoi:10.1287/msom.1050.0077 fatcat:tldt5cdpbvgijpfftojnx6sv3a