Year: 1997
Author: Pichler, Eva
Journal of Contextual Economics – Schmollers Jahrbuch, Vol. 117 (1997), Iss. 4 : pp. 545–565
Abstract
The present paper is dealing with the link between quality and market power in the context of saturation goods. Investigating the conditions of a quality improvement to increase demand elasticity, the findings suggest the existence of a saturation level which depends on quality. Following Lancasters approach to consumer theory, an appropriate definition of quality is proposed. This specification allows a natural interpretation of the bias of the quality choice by a monopolist. Furthermore, we investigate firm behavior both in an imperfect competitive output market, and in oligopoly to find that firms can build up market power and increase profits by improving quality. Thus a firm's competitiveness can be traced back to its ability to produce quality more efficiently than its competitors.
Journal Article Details
Publisher Name: Global Science Press
Language: Multiple languages
DOI: https://doi.org/10.3790/schm.117.4.545
Journal of Contextual Economics – Schmollers Jahrbuch, Vol. 117 (1997), Iss. 4 : pp. 545–565
Published online: 1997-04
AMS Subject Headings: Duncker & Humblot
Copyright: COPYRIGHT: © Global Science Press
Pages: 21