Snobs and Quality Gaps

Suren Basov

The B.E. Journal of Theoretical Economics, 2006, vol. 6, issue 1, 10

Abstract: The paper characterizes the optimal provision of quality by a monopolist facing a population of consumers with private valuation for quality. Unlike previous models by Mussa and Rosen (1978) and others, this paper assumes there is a mass of consumers who prefer the highest quality goods. I liken these consumers to snobs who demand the highest valued goods. I show that the quality supplied jumps discontinuously as the highest valued consumers are encountered and the variety of products is reduced as the population of snobs increases. I also show that only snobs may be supplied once their population grows to a critical size.

Keywords: screening; product line; quality gap (search for similar items in EconPapers)
Date: 2006
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DOI: 10.2202/1534-5971.1254

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