The Dissipation of Profits by Brand Name Investment and Entry when Price Guarantees Quality
AbstractTwo previous models of the dissipation of profits generated by the use of quality-guaranteeing prices assumed that pro fits were dissipated through investment in brand-name capital and ent ry. The model of this paper allows both possibilities. It is shown th at both types of dissipation will, in general, occur and that brand-n ame investment will dissipate a greater share of profits as the elast icity of consumer response to brand-name investment grows larger. Copyright 1987 by University of Chicago Press.
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Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Political Economy.
Volume (Year): 95 (1987)
Issue (Month): 4 (August)
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- Haucap, Justus & Wey, Christian & Barmbold, Jens, 2000.
"Location costs, product quality and implicit franchise contracts,"
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