Changying Li, Jianhu Zhang

Product Varieties in a Quality-Differentiated Goods Monopoly

Jahrgang 175 () / Heft 3, S. 524-536 (13)

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This paper analyzes market versus optimal product varieties in a vertically differentiated goods monopoly. Four results are obtained. First, compared to the first- or second-best optimum, product varieties are always undersupplied by a monopolist. Second, the quality range under a monopoly is smaller than that under the first- or second-best optimum. Third, the monopolist distorts the lowest quality upward while distorting the highest quality downward. Finally, a fixed-cost subsidy can lead to a second-best outcome where a social planner determines the number of product varieties and the corresponding qualities, and the monopolist decides the prices.

Changying Li Keine aktuellen Daten verfügbar.

Jianhu Zhang Keine aktuellen Daten verfügbar.