Monopoly and Quality Omission

Amit Gayer ()
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Amit Gayer: Economics and Management Department, Tel-Hai College, Qiryat Shemona 9977, Israel

Games, 2024, vol. 15, issue 6, 1-12

Abstract: This study delves into a market characterized by vertical product differentiation. Product qualities are represented on a one-dimensional interval scale. The research investigates the equilibrium within a monopoly scenario, considering a production cost that is strictly convex. The monopoly offers a strategy comprising various quality–price combinations, with consumer choices determining profits. The analysis involves a comparison between two analogous models: one with a continuous range of consumers and the other with a finite number of consumers. The study explores disparities in the potential for market failure between these two settings. Notably, numerical illustrations underscore these divergences in both market contexts.

Keywords: monopoly; market failure; welfare maximization; multi product quality; quality omission; a fully/partially served market (search for similar items in EconPapers)
JEL-codes: C C7 C70 C71 C72 C73 (search for similar items in EconPapers)
Date: 2024
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