Quality choice, sales restriction and the mode of competition

Boccard, Nicolas;Wauthy, Xavier
(2006) The Manchester School — Vol. 74, n° 1, p. 64-84 (2006)

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Abstract
A regulator imposing sales restrictions or capacity limitation on firms competing in oligopolistic markets may enhance quality provision by these firms. The instrument amounts to protecting entrants or low-quality firms; this in turn makes it profitable to sink money into quality upgrades. Moreover, for most restrictions levels, the impact on quality selection is invariant to the mode of competition.
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Boccard, N., & Wauthy, X. (2006). Quality choice, sales restriction and the mode of competition. The Manchester School, 74(1), 64-84. https://doi.org/10.1111/j.1467-9957.2006.00483.x (Original work published 2006)