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Snobs and Quality Gaps

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  • Suren Basov

Abstract

In this paper I revisit the Mussa and Rosen (1978) model. However, unlike Mussa and Rosen, I assume that there is a positive mass of the consumers of the highest possible type. I call them snobs. I prove that snobs consumers are served efficiently and the product line decreases in the mass of the serious consumers. Moreover, if the mass of the serious consumers is more than some critical level then they are the only consumers who are served at equilibrium.

Suggested Citation

  • Suren Basov, 2005. "Snobs and Quality Gaps," Department of Economics - Working Papers Series 944, The University of Melbourne.
    • Handle: RePEc:mlb:wpaper:944
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    References listed on IDEAS

    as
    1. David Sappington, 1983. "Optimal Regulation of a Multiproduct Monopoly with Unknown Technological Capabilities," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 453-463, Autumn.
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    5. Leonard J. Mirman & David Sibley, 1980. "Optimal Nonlinear Prices for Multiproduct Monopolies," Bell Journal of Economics, The RAND Corporation, vol. 11(2), pages 659-670, Autumn.
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    7. J. A. Mirrlees, 1971. "An Exploration in the Theory of Optimum Income Taxation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 38(2), pages 175-208.
    8. Eric Maskin & John Riley, 1984. "Monopoly with Incomplete Information," RAND Journal of Economics, The RAND Corporation, vol. 15(2), pages 171-196, Summer.
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    More about this item

    Keywords

    screening; product line; efficiency;
    All these keywords.

    JEL classification:

    • C0 - Mathematical and Quantitative Methods - - General
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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