IDEAS home Printed from https://ideas.repec.org/p/ctl/louvre/2005041.html
   My bibliography  Save this paper

Positional effects, product quality and regulation in duopoly

Author

Listed:
  • Luca LAMBERTINI

    (ENCORE, Faculty of Economics and Econometrics, University of Amsterdam)

  • Raimondello ORSINI

    (Department of Economics, University of Bologna)

Abstract

We investigate positional effects in a vertically differentiated duopoly, evaluated against the first best. Positional concerns distort the allocation of consumers across varieties, as well as the average quality. If the external effect is sufficiently relevant, the resulting welfare loss is increasing in the extent of the externality itself. The beneficial effect of regulation through a minimum quality standard is analysed.

Suggested Citation

  • Luca LAMBERTINI & Raimondello ORSINI, 2005. "Positional effects, product quality and regulation in duopoly," Discussion Papers (REL - Recherches Economiques de Louvain) 2005041, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  • Handle: RePEc:ctl:louvre:2005041
    as

    Download full text from publisher

    File URL: http://sites.uclouvain.be/econ/DP/REL/2005041.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Crampes, Claude & Hollander, Abraham, 1995. "Duopoly and quality standards," European Economic Review, Elsevier, vol. 39(1), pages 71-82, January.
    2. 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.
    3. L. Lambertini, 1995. "The Multiproduct Monopolist Under Vertical Differentiation: an Inductive Approach," Working Papers 226, Dipartimento Scienze Economiche, Universita' di Bologna.
    4. Cremer, Helmuth & Thisse, Jacques-Francois, 1994. "Commodity Taxation in a Differentiated Oligopoly," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 35(3), pages 613-633, August.
    5. Basu, Kaushik, 1987. "Monopoly, quality uncertainty and 'status' goods," International Journal of Industrial Organization, Elsevier, vol. 5(4), pages 435-446.
    6. Lambertini, Luca & Mosca, Manuela, 1999. "On the Regulation of a Vertically Differentiated Market," Australian Economic Papers, Wiley Blackwell, vol. 38(4), pages 354-366, December.
    7. Uri Ronnen, 1991. "Minimum Quality Standards, Fixed Costs, and Competition," RAND Journal of Economics, The RAND Corporation, vol. 22(4), pages 490-504, Winter.
    8. H. Leibenstein, 1950. "Bandwagon, Snob, and Veblen Effects in the Theory of Consumers' Demand," The Quarterly Journal of Economics, Oxford University Press, vol. 64(2), pages 183-207.
    9. Avner Shaked & John Sutton, 1982. "Relaxing Price Competition Through Product Differentiation," Review of Economic Studies, Oxford University Press, vol. 49(1), pages 3-13.
    10. Bagwell, Laurie Simon & Bernheim, B Douglas, 1996. "Veblen Effects in a Theory of Conspicuous Consumption," American Economic Review, American Economic Association, vol. 86(3), pages 349-373, June.
    11. Ecchia, Giulio & Lambertini, Luca, 1997. "Minimum Quality Standards and Collusion," Journal of Industrial Economics, Wiley Blackwell, vol. 45(1), pages 101-113, March.
    12. Ireland, Norman J., 1994. "On limiting the market for status signals," Journal of Public Economics, Elsevier, vol. 53(1), pages 91-110, January.
    13. Lambertini, Luca & Orsini, Raimondello, 2002. "Vertically Differentiated Monopoly with a Positional Good," Australian Economic Papers, Wiley Blackwell, vol. 41(2), pages 151-163, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Luca Savorelli & Jacob Seifert, 2016. "Spatial competition and social welfare in the presence of non-monotonic network effects," Discussion Paper Series, Department of Economics 201615, Department of Economics, University of St. Andrews, revised 06 Jun 2017.
    2. Klarl, Torben, 2013. "Consumer's Environmental Awareness and the Role of (Green) Entrepreneurship: Lessons from Environmental Quality Competition and R&D Activities for Environmental Policy," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79729, Verein für Socialpolitik / German Economic Association.
    3. Evdokia Dritsa & Eleftherios Zacharias, 2012. "Price Competition in a Duopoly Characterized by Positional Effects," Working Papers 12-21, NET Institute.
    4. Dorothée Brécard, 2013. "Environmental Quality Competition and Taxation in the Presence of Green Network Effect Among Consumers," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 54(1), pages 1-19, January.
    5. Petal Jean Hackett, 2012. "Cutting too Close? Design Protection and Innovation in Fashion Goods," CESifo Working Paper Series 3716, CESifo Group Munich.

    More about this item

    Keywords

    Positional externality; status siiking; vertical differential; quality standard;

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ctl:louvre:2005041. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sebastien SCHILLINGS). General contact details of provider: http://edirc.repec.org/data/iruclbe.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.