Effect of credible quality investment with Bertrand and Cournot competition

Reiko Aoki

研究成果: Contribution to journalArticle査読

17 被引用数 (Scopus)

抄録

We show how credible revelation and ability to commit to quality choice effect equilibrium qualities and welfare when product market is either Bertrand or Cournot competition. We show that results depend on the type of competition but not generally on the cost of quality function. We show that with Bertrand competition, the equilibrium qualities are lower with credible commitment. Competition is moderated and producer surplus is higher and consumer surplus lower. With Cournot competition, higher quality will be better but lower quality will be worse with credible commitment. Consumer surplus is always greater with credible commitment and if cost does not increase too quickly with quality, producer surplus will also increase. Thus credible commitment is a collusive device with Bertrand competition but it can improve social welfare with Cournot competition.

本文言語英語
ページ(範囲)653-672
ページ数20
ジャーナルEconomic Theory
21
2-3
DOI
出版ステータス出版済み - 3 1 2003

All Science Journal Classification (ASJC) codes

  • 経済学、計量経済学

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