EconPapers    
Economics at your fingertips  
 

Price–quality competition in a mixed duopoly

Tilman Klumpp and Xuejuan Su ()

Journal of Public Economic Theory, 2019, vol. 21, issue 3, 400-432

Abstract: We examine competition between a private and a public provider in markets for merit goods, such as education, healthcare, housing, recreation, or culture. The private firm provides a high‐price/high‐quality variety of the good and serves richer individuals, whereas the public firm provides a low‐price/low‐quality variety and serves poorer individuals. We first characterize the private competitor’s best response to changes in the public firm’s price and quality. This enables us to examine the distributional effects of policies that affect the price or quality of the public firm’s product. We then numerically characterize the public firm’s optimal provision policy, taking the private response into consideration. Our results have implications for the financing of publicly provided goods, and for whether additional resources, if available, should be spent on reducing the price or enhancing the quality of these goods.

Date: 2019
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://doi.org/10.1111/jpet.12357

Related works:
Working Paper: Price-Quality Competition in a Mixed Duopoly (2018) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:jpbect:v:21:y:2019:i:3:p:400-432

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1097-3923

Access Statistics for this article

Journal of Public Economic Theory is currently edited by Rabah Amir, Gareth Myles and Myrna Wooders

More articles in Journal of Public Economic Theory from Association for Public Economic Theory Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().

 
Page updated 2020-07-01
Handle: RePEc:bla:jpbect:v:21:y:2019:i:3:p:400-432