The Multiproduct Firm, Quality Choice, and Regulation.
A monopolist facing a market of heterogeneous consumers will distort the quality a rray. This paper explores three regulatory remedies-minimum quality s tandards (MQS), maximum price regulation (MPR), and rate of return re gulation (RORR)-that can counteract this distortion. MQS and MPR rais e the quality offered to consumers with a low willingness-to-pay for quality. While MQS have no effect on the quality offered to consumers with a high willingness-to-pay, MPR decreases the quality offered to this group. If production of high- (low-) quality goods is capital i ntensive, RORR increases (decreases) the quality offered to both grou ps. Copyright 1988 by Blackwell Publishing Ltd.
Year of publication: |
1988
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Authors: | Besanko, David ; Donnenfeld, Shabtai ; White, Lawrence J |
Published in: |
Journal of Industrial Economics. - Wiley Blackwell. - Vol. 36.1988, 4, p. 411-29
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Publisher: |
Wiley Blackwell |
Saved in:
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