If at First You Don't Succeed...: Profits, Prices and Market Structure in a Model of Quality with Unknowable Consumer Heterogeneity

Posted: 19 Sep 2002

See all articles by Kala Krishna

Kala Krishna

Pennsylvania State University - Department of Economics; National Bureau of Economic Research (NBER)

Tor Winston

U.S. Department of Justice - Antitrust Division

Multiple version iconThere are 3 versions of this paper

Abstract

Why are higher quality niches seen as intrinisically more profitable in business circles? Why do high quality products sometimes have a low real price, while it is unusual to see low quality products with high real prices? Can markets have quality differentiation as well as quality bunching? How does the rate at which fixed costs change with quality affect market structure? In this paper we develop a new model of quality which casts light on such issues.

Keywords: Quality Choice, Mixed Strategies, Free Entry, Endogenous Market Structure, Natural Oligopolies, Resampling, Quality Dispersion, Fixed Costs, Product Differentiation

JEL Classification: D4, D6, L1, L2

Suggested Citation

Krishna, Kala and Winston, Tor, If at First You Don't Succeed...: Profits, Prices and Market Structure in a Model of Quality with Unknowable Consumer Heterogeneity. Available at SSRN: https://ssrn.com/abstract=315245

Kala Krishna (Contact Author)

Pennsylvania State University - Department of Economics ( email )

523 Kern Graduate Building
University Park, PA 16802-3306
United States
814-865-1106 (Phone)
814-863-4775 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Tor Winston

U.S. Department of Justice - Antitrust Division ( email )

950 Pennsylvania Avenue, NW
Washington, DC 20530
United States
202-307-0866 (Phone)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
470
PlumX Metrics