Oligopolistic Competition in Price and Quality

Andrei Dubovik and Maarten Janssen

No 08-068/1, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: This discussion paper led to an article in Games and Economic Behavior (2012), pp. 120-138.

We consider an oligopolistic market where firms compete in price and quality and where consumers are heterogeneous in knowledge: some consumers know both the prices and quality of the products offered, some know only the prices and some know neither. We show that two types of signalling equilibria are possible. Both are characterised by dispersion and Pareto-inefficiency of the price/quality offers. But, better price/quality combinations are signalled with lower prices in one type and with higher prices in the other type.

Keywords: oligopoly; competition; price; quality; imperfect information; signalling (search for similar items in EconPapers)
JEL-codes: D43 D83 L13 L15 (search for similar items in EconPapers)
Date: 2008-07-14
References: Add references at CitEc
Citations: View citations in EconPapers (6)

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Journal Article: Oligopolistic competition in price and quality (2012)
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