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Price and quality competition

Chioveanu, I.; (2010) Price and quality competition. (ELSE Working Papers 373). ESRC Centre for Economic Learning and Social Evolution: London, UK. Green open access

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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.

Type: Working / discussion paper
Title: Price and quality competition
Open access status: An open access version is available from UCL Discovery
Publisher version: http://else.econ.ucl.ac.uk/newweb/papers.php#2010
Language: English
Keywords: Oligopoly, price and quality competition, quality standards
UCL classification: UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/19479
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