Minimum Quality Standards under Asymmetric Duopoly with Endogenous Quality Ordering: A Note |
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| Authors: | Jinji Naoto Toshimitsu Tsuyoshi |
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| Institution: | (1) Graduate School of Economics, Hitotsubashi University, 2-1 Naka, Kunitachi, Tokyo, 186-8601, Japan;(2) School of Economics, Kwansei Gakuin University, 1-155 Uegahara, Nishinomiya, Hyogo, 662-8501, Japan |
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| Abstract: | In this note, we revisit minimum quality standards (MQS) under a vertically differentiated duopoly. We generalize the model in Ronnen (1991) and Valletti (2000) by introducing asymmetry into the fixed cost of quality improvement and by explicitly taking into account the endogeneity of quality ordering. In the generalized model, we show that the results derived by Ronnen (1991) and Valletti (2000) are largely robust. |
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| Keywords: | asymmetric duopoly endogenous quality ordering minimum quality standards vertical product differentiation |
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