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The determinants of the quantity-quality balance in monopoly

Citation

Sibly, HA, The determinants of the quantity-quality balance in monopoly, Australian Economic Papers, 48, (1) pp. 65-79. ISSN 0004-900X (2009) [Refereed Article]


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The definitive published version is available online at: http://interscience.wiley.com

Official URL: http://interscience.wiley.com

DOI: doi:10.1111/j.1467-8454.2009.00364.x

Abstract

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.

Item Details

Item Type:Refereed Article
Research Division:Economics
Research Group:Applied Economics
Research Field:Public Economics- Publically Provided Goods
Objective Division:Economic Framework
Objective Group:Microeconomics
Objective Field:Consumption
Author:Sibly, HA (Dr Hugh Sibly)
ID Code:62124
Year Published:2009
Web of Science® Times Cited:2
Deposited By:Economics and Finance
Deposited On:2010-03-10
Last Modified:2010-04-27
Downloads:0

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