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Quality provision under conditions of oligopoly
Journal of Economics ( IF 1.889 ) Pub Date : 2020-08-10 , DOI: 10.1007/s00712-020-00714-8
Johan Willner , Sonja Grönblom

We analyse a market where quality is reflected in sunk costs and/or marginal costs. Firms provide too low quality as compared to the socially optimal solution whenever quality affects (at least) sunk costs. Entry would then increase welfare, but the number of firms is restricted by an upper limit that depends on how sunk costs and consumer utility are affected by a quality change. Firms may even produce an excessive output if both types of costs are dependent on quality. Moreover, entry reduces quality except for when the number of firms increases from two to three. Quality is on the other hand socially optimal and independent of market structure if only marginal costs are affected by quality, but output is too low unless the number of firms is very high.

中文翻译:

寡头垄断条件下的质量供给

我们分析了一个质量反映在沉没成本和/或边际成本的市场。每当质量影响(至少)沉没成本时,与社会最优解决方案相比,公司提供的质量太低。进入会增加福利,但企业的数量受到上限的限制,上限取决于沉没成本和消费者效用如何受到质量变化的影响。如果两种类型的成本都依赖于质量,企业甚至可能会生产过多的产品。此外,除非公司数量从两个增加到三个,否则进入会降低质量。另一方面,如果只有边际成本受质量影响,则质量是社会最优的且独立于市场结构,但除非公司数量非常多,否则产量太低。
更新日期:2020-08-10
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