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Positional effects, product quality and regulation in duopoly

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  • Luca Lambertini
  • Raimondello Orsini

Abstract

We investigate positional effects in a vertically differentiated duopoly, evaluated against the first best. Positional concerns distort the allocation of consumers across varieties, as well as the average quality. If the external effect is sufficiently relevant, the resulting welfare loss is increasing in the extent of the externality itself. The beneficial effect of regulation through a minimum quality standard is analysed.

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Bibliographic Info

Article provided by De Boeck Université in its journal Recherches économiques de Louvain.

Volume (Year): 71 (2005)
Issue (Month): 4 ()
Pages: 367-381

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Handle: RePEc:cai:reldbu:rel_714_0367

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Web page: http://www.cairn.info/revue-recherches-economiques-de-louvain.htm

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  1. Ecchia, Giulio & Lambertini, Luca, 1997. "Minimum Quality Standards and Collusion," Journal of Industrial Economics, Wiley Blackwell, vol. 45(1), pages 101-13, March.
  2. Cremer, Helmuth & Thisse, Jacques-Francois, 1994. "Commodity Taxation in a Differentiated Oligopoly," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 35(3), pages 613-33, August.
  3. Jaskold Gabszewicz, J. & Thisse, J. -F., 1979. "Price competition, quality and income disparities," Journal of Economic Theory, Elsevier, vol. 20(3), pages 340-359, June.
  4. Crampes, C. & Hollander, A., 1991. "Duopoly and Quality Standards," Cahiers de recherche 9128, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
  5. Lambertini, Luca & Orsini, Raimondello, 2002. "Vertically Differentiated Monopoly with a Positional Good," Australian Economic Papers, Wiley Blackwell, vol. 41(2), pages 151-63, June.
  6. Luca LAMBERTINI, 1997. "The multiproduct monopolist under vertical differentiation : An inductive approach," Discussion Papers (REL - Recherches Economiques de Louvain) 1997021, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  7. Ireland, Norman J., 1994. "On limiting the market for status signals," Journal of Public Economics, Elsevier, vol. 53(1), pages 91-110, January.
  8. Bagwell, Laurie Simon & Bernheim, B Douglas, 1996. "Veblen Effects in a Theory of Conspicuous Consumption," American Economic Review, American Economic Association, vol. 86(3), pages 349-73, June.
  9. Basu, Kaushik, 1987. "Monopoly, quality uncertainty and 'status' goods," International Journal of Industrial Organization, Elsevier, vol. 5(4), pages 435-446.
  10. Shaked, Avner & Sutton, John, 1982. "Relaxing Price Competition through Product Differentiation," Review of Economic Studies, Wiley Blackwell, vol. 49(1), pages 3-13, January.
  11. Lambertini, Luca & Mosca, Manuela, 1999. "On the Regulation of a Vertically Differentiated Market," Australian Economic Papers, Wiley Blackwell, vol. 38(4), pages 354-66, December.
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Cited by:
  1. Petal Jean Hackett, 2012. "Cutting too Close? Design Protection and Innovation in Fashion Goods," CESifo Working Paper Series 3716, CESifo Group Munich.
  2. Torben Klarl, 2013. "Consumer's Environmental Awareness and the Role of (Green) Entrepreneurship: Lessons from Environmental Quality Competition and R&D Activities for Environmental Policy," Discussion Paper Series 321, Universitaet Augsburg, Institute for Economics.
  3. Evdokia Dritsa & Eleftherios Zacharias, 2012. "Price Competition in a Duopoly Characterized by Positional Effects," Working Papers 12-21, NET Institute.
  4. Klarl, Torben, 2013. "Consumer's Environmental Awareness and the Role of (Green) Entrepreneurship: Lessons from Environmental Quality Competition and R&D Activities for Environmental Policy," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79729, Verein für Socialpolitik / German Economic Association.

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