The determinants of the quantity-quality balance in monopoly
journal contribution
posted on 2023-05-17, 01:57authored bySibly, HA
This paper describes how a monopolist manipulates the balance of quantity and quality in order to increase revenue when its customers treat quantity and quality as substitutes. This ‘skewing’ of quality depends on the characteristics of customer’s demand for quality. Customers differ in demand for quality, because they differ in either (i) their preferences and/or (ii) their time cost per unit. The monopolist is constrained to supply the same quality of good to all customers. The price and quality per unit are described under the assumption the monopolist (i) profit maximises; (ii) maximises social welfare subject to a profit constraint. The determinants of the skewing of quantity and quality are found under third-degree price discrimination and uniform pricing.
History
Publication title
Australian Economic Papers
Volume
48
Pagination
65-79
ISSN
0004-900X
Department/School
TSBE
Publisher
Wiley-Blackwell Publishing Asia
Place of publication
Australia
Rights statement
The definitive published version is available online at: http://interscience.wiley.com