QUALITY CHOICE, SALES RESTRICTION AND THE MODE OF COMPETITION
Nicolas Boccard () and
Manchester School, 2006, vol. 74, issue 1, 64-84
A regulator imposing sales restrictions or capacity limitation on firms competing in oligopolistic markets may enhance quality provision by these firms. The instrument amounts to protecting entrants or low‐quality firms; this in turn makes it profitable to sink money into quality upgrades. Moreover, for most restrictions levels, the impact on quality selection is invariant to the mode of competition.
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