Quality and Quantity Competition
AbstractThis article develops an oligopoly model where both prices and quality levels are determined at the equilibrium. Multiple symmetric equilibria arise when the distribution of consumers according to their willingness to pay is not uniform and more than one firm participates in the market. With a uniform distribution, we demonstrate that the impact of entry is to reduce average quality and to increase aggregate output. The implications for social welfare are ambiguous.
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Bibliographic InfoArticle provided by The RAND Corporation in its journal Bell Journal of Economics.
Volume (Year): 14 (1983)
Issue (Month): 2 (Autumn)
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- Rasha Ahmed & Kathleen Segerson, 2006. "Collective Voluntary Agreements and the Production of Less Polluting Products," Working papers 2006-18, University of Connecticut, Department of Economics, revised May 2007.
- Chisholm, Darlene C. & Norman, George, 2012. "Market access and competition in product lines," International Journal of Industrial Organization, Elsevier, vol. 30(5), pages 429-435.
- Rasha Ahmed & Kathleen Segerson, 2007. "Emissions Control and the Regulation of Product Markets: The Case of Automobiles," Working papers 2007-40, University of Connecticut, Department of Economics.
- Brekke, Kurt R. & Siciliani, Luigi & Straume, Odd Rune, 2014.
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