Price equilibrium and willingness to pay in a vertically differentiated mixed duopoly

Corrado Benassi, Massimiliano Castellani and Maurizio Mussoni

Journal of Economic Behavior & Organization, 2016, vol. 125, issue C, 86-96

Abstract: In the framework of a vertically differentiated mixed duopoly, with uncovered market and zero costs, we study the existence of a price equilibrium when a welfare-maximizing public firm producing low quality goods competes against a profit-maximizing private firm producing high quality goods. We show that a price equilibrium exists if the quality spectrum is wide enough vis à vis a measure of the convexity of the distribution of the consumers’ willingness to pay, and that such equilibrium is unique if this sufficient condition is tightened. Logconcavity of the income distribution is inconsistent with the existence of equilibrium.

Keywords: Price equilibrium; Vertical differentiation; Mixed duopoly (search for similar items in EconPapers)
JEL-codes: D43 L13 L51 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167268116000196
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Price equilibrium and willingness to pay in a vertically differentiated mixed duopoly (2015)
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:eee:jeborg:v:125:y:2016:i:c:p:86-96

DOI: 10.1016/j.jebo.2016.01.011

Access Statistics for this article

Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

More articles in Journal of Economic Behavior & Organization from Elsevier
Bibliographic data for series maintained by Catherine Liu ().