Quality Choice, Trade Policy, and Firm Incentives
Quality choice is examined in a duopoly with one foreign and one domestic firm where consumers have similar preferences for quality but different preferences for brands. Firms make quality commitments prior to choosing price and policy intervention assumes several forms. The policy conclusions depend on whether firms face "set-up" costs in raising product quality. In the absence of set-up costs, both domestic and foreign firms make socially optimal quality choices. In the presence of set-up costs, the foreign firm, and often the domestic firm, sets quality below the socially optimal level. Incomplete information alters these conclusions, however. Copyright 1992 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 33 (1992)
Issue (Month): 4 (November)
|Contact details of provider:|| Postal: 160 McNeil Building, 3718 Locust Walk, Philadelphia, PA 19104-6297|
Phone: (215) 898-8487
Fax: (215) 573-2057
Web page: http://www.econ.upenn.edu/ier
More information through EDIRC
|Order Information:|| Web: http://www.blackwellpublishing.com/subs.asp?ref=0020-6598 Email: |