PRODUCT QUALITY, INCOME INEQUALITY AND MARKET STRUCTURE

Tanmoyee Banerjee (Chatterjee) () and Ajitava Raychaudhuri

Journal of Economic Development, 2004, vol. 29, issue 1, 51-84

Abstract: This paper analyses the effects of a change in distribution of income on quality choice made by firms producing search goods. It is assumed that willingness to pay for quality of consumers is an increasing function of income. Under the assumption that distribution of income is positively skewed, which is a common characteristic of developing countries, any redistribution of income will induce firms to improve their quality levels in duopoly and monopoly markets if redistribution makes consumers equally or unequally better off. On the other hand, quality levels will deteriorate if poverty is distributed more equally among consumers.

Keywords: Product Quality; Income Inequality; Heterogeneous Preferences; Discriminating Monopolist; Two-Stage Duopoly Game (search for similar items in EconPapers)
JEL-codes: D31 D42 D43 L15 (search for similar items in EconPapers)
Date: 2004
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.jed.or.kr/full-text/29-1/Ajitava.PDF (application/pdf)

Related works:
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:jed:journl:v:29:y:2004:i:1:p:51-84

Access Statistics for this article

Journal of Economic Development is currently edited by Sung Y. Park

More articles in Journal of Economic Development from Chung-Ang Unviersity, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Sung Y. Park ().