Price equilibrium and willingness to pay in a vertically differentiated mixed duopoly

Benassi, Corrado ; Castellani, Massimiliano ; Mussoni, Maurizio (2015) Price equilibrium and willingness to pay in a vertically differentiated mixed duopoly. Bologna: Dipartimento di Scienze economiche DSE, p. 27. DOI 10.6092/unibo/amsacta/4284. In: Quaderni - Working Paper DSE (1012). ISSN 2282-6483.
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Abstract

In the framework of a vertically differentiated mixed duopoly, with uncovered market and costless quality choice, we study the existence of a price equilibrium when a welfare-maximizing public firm producing low quality goods competes against a profit-maximizing private firm producing high quality goods. We show that a price equilibrium exists if the quality spectrum is wide enough vis à vis a measure of the convexity of the distribution of the consumers' willingness to pay, and that such equilibrium is unique if this sufficient condition is tightened. Log-concavity of the income distribution is inconsistent with the existence of equilibrium.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Benassi, Corrado
Castellani, Massimiliano
Mussoni, Maurizio
Keywords
price equilibrium, vertical differentiation, mixed duopoly
Subjects
ISSN
2282-6483
DOI
Deposit date
15 Jun 2015 09:45
Last modified
21 Oct 2015 10:01
URI

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