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Monopoly and Quality Distortion: Effects and Remedies

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Author Info
Besanko, David
Donnenfeld, Shabtai
White, Lawrence J

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Abstract

A monopolist that sells in a market in which consumers differ in their willingness to pay for qua lity will distort and enlarge the range of products offered for sale. The authors examine the positive and normative impacts of remedies u sed to counteract such distortions. For the case of a price ceiling, the monopolist improves quality at the low quality end of the market, offsetting the distortion induced by the unregulated exercise of mon opoly power. Social welfare can be shown to increase for a sufficient ly slight degree of price regulation. For minimum quality standards, the social welfare implications are ambiguous because the standards m ay exclude some consumers from the market. Copyright 1987, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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Publisher Info
Article provided by MIT Press in its journal Quarterly Journal of Economics.

Volume (Year): 102 (1987)
Issue (Month): 4 (November)
Pages: 743-67
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Handle: RePEc:tpr:qjecon:v:102:y:1987:i:4:p:743-67

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  1. Alexander Kemnitz & Cyrus Hemmasi, 2003. "Price ceilings and quality competition," Economics Bulletin, Economics Bulletin, vol. 4(20), pages 1-9. [Downloadable!]
  2. 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. [Downloadable!]
  3. 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. [Downloadable!]
  4. Bonroy, Olivier, 2003. "Le standard de qualité minimale est-il un instrument socialement optimal? Une revue de littérature," Cahiers de recherche 0304, GREEN. [Downloadable!]
  5. Hans Zenger, 2006. "The Optimal Regulation of Product Quality under Monopoly," Economics Bulletin, Economics Bulletin, vol. 12(13), pages 1-4. [Downloadable!]
  6. Luca Lambertini, 1995. "The Multiproduct Monopolist Under Vertical Differentiations: an Inductive Approach," Working Papers 226, Dipartimento Scienze Economiche, Universita' di Bologna. [Downloadable!]
  7. Pierre Fleckinger, 2007. "Collective Reputation and Market Structure: Regulating the Quality vs Quantity Trade-of," Working Papers hal-00243080_v1, HAL. [Downloadable!]
  8. Matt Shum & S Esteban & E Miyagawa, 2003. "Nonlinear Pricing with Self-Control Preferences," Economics Working Paper Archive 503, The Johns Hopkins University,Department of Economics. [Downloadable!]
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  9. S. Baranzoni & P. Bianchi & L. Lambertini, 2000. "Market Structure," Working Papers 368, Dipartimento Scienze Economiche, Universita' di Bologna. [Downloadable!]
  10. Ida Ferrara, 2007. "Automobile quality choice under pollution control regulation," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 38(3), pages 353-372, November. [Downloadable!] (restricted)
  11. Luca Lambertini & Manuela Mosca, 1996. "Regulation of A Vertically Differentiated Market Through Taxation/Subsidization of Product Quality," Working Papers 247, Dipartimento Scienze Economiche, Universita' di Bologna. [Downloadable!]
  12. Luca Lambertini, 1995. "Product Innovation Under Vertical Differentiation and the Persistence of Monoply," Working Papers 227, Dipartimento Scienze Economiche, Universita' di Bologna. [Downloadable!]
  13. Matsukawa, Isamu, 2006. "Regulating a Monopoly Offering Priority Service," MPRA Paper 991, University Library of Munich, Germany. [Downloadable!]
  14. Isamu Matsukawa, 2009. "Regulatory effects on the market penetration and capacity of reliability differentiated service," Journal of Regulatory Economics, Springer, vol. 36(2), pages 199-217, October. [Downloadable!] (restricted)
  15. Daniel Flores, 2009. "All you can drink: should we worry about quality?," Journal of Regulatory Economics, Springer, vol. 35(1), pages 1-18, February. [Downloadable!] (restricted)
  16. Bergès-Sennou, F. & Mitraille, S., 2003. "Private label, quality choice and bargaining power in a vertical structure," Economics Working Paper Archive (Toulouse) 52, French Institute for Agronomy Research (INRA), Economics Laboratory in Toulouse (ESR Toulouse). [Downloadable!]
  17. G. Ecchia & L. Lambertini, 1997. "Full vs Partial Market Coverage with Minimum Quality Standards," Working Papers 285, Dipartimento Scienze Economiche, Universita' di Bologna. [Downloadable!]
  18. Ida Ferrara & Charles Plourde, 1998. "Refillable Versus Non-Refillable Containers The Impact Of Regulatory Measures On Packaging Mix And Quality Choices," Working Papers 1998_03, York University, Department of Economics. [Downloadable!]
    Other versions:
  19. L. Lambertini & R. Orsini, 2004. "R&D for Quality Improvement and Network Externalities," Working Papers 516, Dipartimento Scienze Economiche, Universita' di Bologna. [Downloadable!]
  20. Giulio Ecchia & Luca Lambertini, 1995. "Minimum Quality Standards and Collusion," Working Papers 235, Dipartimento Scienze Economiche, Universita' di Bologna. [Downloadable!]
    Other versions:
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