Product Quality, Income Inequality And Market Structure
AbstractThis paper analyses the effects of a change in distribution of income on quality choice made by firms producing search goods. It is assumed that willingness to pay for quality of consumers is an increasing function of income. Under the assumption that distribution of income is positively skewed, which is a common characteristic of developing countries, any redistribution of income will induce firms to improve their quality levels in duopoly and monopoly markets if redistribution makes consumers equally or unequally better off. On the other hand, quality levels will deteriorate if poverty is distributed more equally among consumers.
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Bibliographic InfoArticle provided by Chung-Ang Unviersity, Department of Economics in its journal Journal Of Economic Development.
Volume (Year): 29 (2004)
Issue (Month): 1 (June)
Product Quality; Income Inequality; Heterogeneous Preferences; Discriminating Monopolist; Two-Stage Duopoly Game;
Find related papers by JEL classification:
- L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- D42 - Microeconomics - - Market Structure and Pricing - - - Monopoly
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
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