Product Quality, Income Inequality And Market Structure
This paper analyses the effects of a change in distribution of income on quality choice made by firms producing search goods. It is assumed that willingness to pay for quality of consumers is an increasing function of income. Under the assumption that distribution of income is positively skewed, which is a common characteristic of developing countries, any redistribution of income will induce firms to improve their quality levels in duopoly and monopoly markets if redistribution makes consumers equally or unequally better off. On the other hand, quality levels will deteriorate if poverty is distributed more equally among consumers.
Volume (Year): 29 (2004)
Issue (Month): 1 (June)
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- Wauthy, Xavier, 1996.
"Quality Choice in Models of Vertical Differentiation,"
Journal of Industrial Economics,
Wiley Blackwell, vol. 44(3), pages 345-353, September.
- Wauthy, X., 1994. "Quality Choice in Models of Vertical Differentiation," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1994033, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
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- Analysis, A Welfare & Das, Satya P. & Donnenfeld, Shabtai, 1987. "Trade policy and its impact on quality of imports," Journal of International Economics, Elsevier, vol. 23(1-2), pages 77-95, August.
- Jaskold Gabszewicz, J. & Thisse, J. -F., 1979. "Price competition, quality and income disparities," Journal of Economic Theory, Elsevier, vol. 20(3), pages 340-359, June.
- GABSZEWICZ, Jean J. & THISSE, Jacques-François, "undated". "Price competition, quality and income disparities," CORE Discussion Papers RP 370, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Flam, Harry & Helpman, Elhanan, 1987. "Vertical Product Differentiation and North-South Trade," American Economic Review, American Economic Association, vol. 77(5), pages 810-822, December. Full references (including those not matched with items on IDEAS)
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