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Can more perishable products be welfare-improving?

Author

Listed:
  • Pak-Sing Choi

    (National Central University)

  • Felix Munoz-Garcia

    (Washington State University)

Abstract

We examine how product perishability affects equilibrium behavior in the Stackelberg model, including firms' output decisions, profits, and welfare. We show that while both firms increase their production levels, aggregate sales decrease in equilibrium due to perishability. Welfare can, however, increase with more perishable products if firms are sufficiently cost symmetric.

Suggested Citation

  • Pak-Sing Choi & Felix Munoz-Garcia, 2023. "Can more perishable products be welfare-improving?," Economics Bulletin, AccessEcon, vol. 43(2), pages 1088-1097.
    • Handle: RePEc:ebl:ecbull:eb-23-00079
    as

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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Stackelberg competition; Perishability; Output advantage; First-mover's advantage; Welfare effects.;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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