Quality Distortion by a Discriminating Monopolist
AbstractThe standard model of monopolistic imperfect quality discrimination involving consumer self-selection has shown that no distortion occurs at the highest quality level, while all lower quality levels are degraded in order to maintain profitable market segmentation. This result flows from the assumption that consumers with a higher total utility of quality also have a higher marginal utility of quality. The paper develops a reasonable model in which the standard assumption is not satisfied, and this alternative model yields vastly different conclusions regarding the form of quality distortion. In particular, quality may be enhanced, not degraded, to maintain profitable market segmentation. Copyright 1989 by American Economic Association.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by American Economic Association in its journal American Economic Review.
Volume (Year): 79 (1989)
Issue (Month): 1 (March)
Other versions of this item:
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Kokovin Sergey & Zhelobodko Evgeniy, 2008. "Diagnosing Efficiency of Distortion in Discrete Screening," EERC Working Paper Series 08/02e, EERC Research Network, Russia and CIS.
- Inderst, Roman, 2002. "Contract design and bargaining power," Economics Letters, Elsevier, vol. 74(2), pages 171-176, January.
- Sang-Ho Lee & Iltae Kim, 2000. "Self-Selection and Optimal Nonlinear Effluent Charges," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 16(1), pages 1-14, May.
- Fischer, Carolyn, 2004. "Who Pays for Energy Efficiency Standards?," Discussion Papers, Resources For the Future dp-04-11, Resources For the Future.
- Philippe Mahenc & Marion Podesta, 2012.
"The monopolist is not the best environmentalistÂ’s best friend: An example,"
- Mahenc, Philippe & Podesta, Marion, 2012. "The monopolist is not the best environmentalist’s best friend: An example," Economics Letters, Elsevier, vol. 115(3), pages 379-382.
- Susanne Kremhelmer & Hans Zenger, 2004. "Advertising and the Media," Industrial Organization, EconWPA 0403003, EconWPA.
- Sibly, Hugh, 2008. "Vertical Product Differentiation with Linear Pricing," Working Papers, University of Tasmania, School of Economics and Finance 7335, University of Tasmania, School of Economics and Finance, revised 01 Jul 2008.
- Kremhelmer, Susanne, 2004. "Fairness, Property Rights, and the Market for Media," Munich Dissertations in Economics 2521, University of Munich, Department of Economics.
- Christopher Coyne & Justin Isaacs & Jeremy Schwartz, 2010. "Entrepreneurship and the taste for discrimination," Journal of Evolutionary Economics, Springer, Springer, vol. 20(4), pages 609-627, August.
- Acharyya, Rajat & Banerjee, Swapnendu, 2012. "On tariff and quality innovation in a market with discrete preferences," Economic Modelling, Elsevier, vol. 29(3), pages 917-925.
- Yasuji Otsuka & Bradley Braun, 2003. "Price Cap Regulation in the Cable Television Industry: Why was the Demand Stagnant?," Journal of Industry, Competition and Trade, Springer, Springer, vol. 3(1), pages 41-55, March.
- McAfee, R. Preston, 2007.
"Pricing Damaged Goods,"
Economics - The Open-Access, Open-Assessment E-Journal,
Kiel Institute for the World Economy, vol. 1(1), pages 1-19.
- Nicholas Economides, 1995. "The Incentive of a Monopolist to Provide All Goods," Working Papers, New York University, Leonard N. Stern School of Business, Department of Economics 95-09, New York University, Leonard N. Stern School of Business, Department of Economics.
- Kala Krishna, 1990. "Export Restraints With Imperfect Competition: A Selective Survey," NBER Working Papers 3244, National Bureau of Economic Research, Inc.
- Kremhelmer, Susanne & Zenger, Hans, 2008. "Advertising and the screening role of mass media," Information Economics and Policy, Elsevier, vol. 20(2), pages 107-119, June.
- Ida Ferrara & Charles Plourde, 1998.
"Refillable Versus Non-Refillable Containers The Impact Of Regulatory Measures On Packaging Mix And Quality Choices,"
Working Papers, York University, Department of Economics
1998_03, York University, Department of Economics.
- Ferrara, Ida & Plourde, Charles, 2003. "Refillable versus non-refillable containers: the impact of regulatory measures on packaging mix and quality choices," Resources Policy, Elsevier, Elsevier, vol. 29(1-2), pages 1-13.
- Inderst, Roman, 2004. "Contractual distortions in a market with frictions," Journal of Economic Theory, Elsevier, vol. 116(1), pages 155-176, May.
- de Palma, Andre & Leruth, Luc, 1996. "Variable willingness to pay for network externalities with strategic standardization decisions," European Journal of Political Economy, Elsevier, vol. 12(2), pages 235-251, September.
- Lacourbe, Paul, 2012. "A model of product line design and introduction sequence with reservation utility," European Journal of Operational Research, Elsevier, Elsevier, vol. 220(2), pages 338-348.
- Ida Ferrara, 2007. "Automobile quality choice under pollution control regulation," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 38(3), pages 353-372, November.
- Fischer, Carolyn, 2005. "On the importance of the supply side in demand-side management," Energy Economics, Elsevier, Elsevier, vol. 27(1), pages 165-180, January.
- Sibly, Hugh, 2008. "Quality Versus Quantity in Vertically Differentiated Products Under Non-Linear Pricing," Working Papers, University of Tasmania, School of Economics and Finance 7335, University of Tasmania, School of Economics and Finance, revised 01 Jun 2008.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jane Voros) or (Michael P. Albert).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.