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A note on quality choice with an extended Mussa and Rosen's model

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  • Rim Lahmandi-Ayed

    (LEGI-Ecole Polytechnique de Tunisie and ESSAI)

Abstract

We suggest a model derived from the well-known Mussa and Rosen's model, in which two populations of consumers of opposite tastes co-exist: they rank in exactly the reverse order variants sold at the same price. This model may account for linked and contradictory characteristics in products (as for instance nutritional quality and taste), with consumers attaching more importance to one or to the other aspect. The subgame perfect equilibrium is fully characterized for a costless duopoly choosing qualities then prices.

Suggested Citation

  • Rim Lahmandi-Ayed, 2007. "A note on quality choice with an extended Mussa and Rosen's model," Economics Bulletin, AccessEcon, vol. 12(15), pages 1-9.
    • Handle: RePEc:ebl:ecbull:eb-07l10015
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    References listed on IDEAS

    as
    1. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
    2. Choi, Chong Ju & Shin, Hyun Song, 1992. "A Comment on a Model of Vertical Product Differentiation," Journal of Industrial Economics, Wiley Blackwell, vol. 40(2), pages 229-231, June.
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    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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