Sequential quality and price competition in hotelling model
- 주제(키워드) Entry , Horizontal differentiation , Vertical differentiation
- 등재 SCOPUS
- 발행기관 Korean Economic Society
- 발행년도 2012
- 총서유형 Journal
- URI http://www.dcollection.net/handler/ewha/000000096324
- 본문언어 영어
초록/요약
We allow sellers in Hotelling model to choose "quality" (referring to the gross surplus of product) before choosing prices and examine welfare implications of introducing a horizontally differentiated product into a monopoly market. Under certain parameter assumptions, we show that entry results in lower prices, lower qualities, (typically) lower consumers' surplus and lower social welfare. Our findings suggest that we should not regard the number of sellers in a differentiated market to be a simple measure of competitiveness.
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