Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

A Member of the Law Professor Blogs Network

Thursday, June 24, 2010

Price and quality competition

Posted by D. Daniel Sokol

Ioana Chioveanuy (University College London - Econ) explains Price and quality competition.

ABSTRACT: This study considers an oligopoly model with simultaneous price and quality choice. Exante homogeneous sellers compete by offering products at one of two quality levels. The consumers have heterogeneous tastes for quality: for some consumers it is efficient to buy a high quality product, while for others it is efficient to buy a low quality product. In the symmetric equilibrium …firms use mixed strategies that randomize both price and quality, and obtain strictly positive pro…ts. This framework highlights trade-offs which determine the impact of consumer protection policy in the form of quality standards.

http://lawprofessors.typepad.com/antitrustprof_blog/2010/06/price-and-quality-competition.html

| Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341bfae553ef0133ef5f0ec6970b

Listed below are links to weblogs that reference Price and quality competition:

Comments

Post a comment