Product Diversity in Asymmetric Oligopoly: Is the Quality of Consumer Goods too Low?

Simon Anderson and André de Palma (adepalmajl@gmail.com)

Virginia Economics Online Papers from University of Virginia, Department of Economics

Abstract: We analyze an oligopoly model with horizontal di¤erentiation and quality di¤erences. High quality goods are over-priced and under-produced. When the market is fairly covered, low quality products may be pro…table when their social contribution is negative, leading to too many products in equilibrium. In a relatively uncovered market, even low quality goods are under-produced and there may be too few entrants. However, when …xed costs di¤er across qualities, the market may produce low quality goods when it should produce high quality ones. The model is calibrated using market data for yoghurt.

Keywords: Product di¤erentiation; asymmetric oligopoly; quality; optimum and equilibrium variety; discrete choice models. (search for similar items in EconPapers)
JEL-codes: D43 L11 L13 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2000-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://repec.as.virginia.edu/RePEc/vir/virpap/papers/virpap349.pdf (application/pdf)

Related works:
Journal Article: Product Diversity in Asymmetric Oligopoly: Is the Quality of Consumer Goods too Low? (2001)
Working Paper: Product Diversity in Asymmetric Oligopoly:Is the Quality of Consumer Goods Too Low? (1995)
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Persistent link: https://EconPapers.repec.org/RePEc:vir:virpap:349

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