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- Title
Quality Distortion by a Discriminating Monopolist.
- Authors
Srinagesh, Padmanabhan; Bradburd, Ralph M.
- Abstract
The standard result of the monopoly imperfect quality discriminating model -- no distortion at the highest quality level, while lower quality levels are degraded -- flows from the assumption that consumers with a higher total utility of quality also have a higher marginal utility of quality. We develop a reasonable model in which the standard assumption is violated This alternative model yields vastly different results. Specifically, quality may be enhanced, not degraded, to maintain profitable market segmentation.
- Subjects
MONOPOLIES; COMPETITIVE advantage in business; PRODUCT quality; MONOPOLISTIC competition; PROFIT; MARKET segmentation; MARGINAL utility
- Publication
American Economic Review, 1989, Vol 79, Issue 1, p96
- ISSN
0002-8282
- Publication type
Article