Entry and Quality Competition in Hotelling Model with Exogenous Prices

다국어 초록 (Multilingual Abstract)

We examine a variant of Hotelling model where prices and locations are fixed but quality is a choice variable. We show that when sellers of a horizontally differentiated product are price-constrained and compete in quality, entry can lead to degradation of quality offered in equilibrium and reduction of consumers' surplus. Our findings may have policy implications for industries such as telecommunications where price is regulated and both horizontal and vertical differentiation is important.

참고문헌 (Reference)

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