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Positional effects, product quality and regulation in duopoly

Published online by Cambridge University Press:  17 August 2016

Luca Lambertini  and
Raimondello Orsini
Luca Lambertini
Affiliation:
ENCORE, Faculty of Economics & Econometrics, University of Amsterdam Department of Economics, University of Bologna
Raimondello Orsini
Affiliation:
Department of Economics, University of Bologna
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Summary

We investigate positional effects in a vertically differentiated duopoly, evaluated against the first best. Positional concerns distort the allocation of consumers across varieties, as well as the average quality. If the external effect is sufficiently relevant, the resulting welfare loss is increasing in the extent of the externality itself. The beneficial effect of regulation through a minimum quality standard is analysed.

Résumé

Résumé

Nous analysons les effets de positionnement, évalués par rapport au « first best », dans un duopole avec différenciation verticale. Des problèmes de positionnement perturbent l'allocation des consommateurs entre les diffé-rentes variétés, tout comme la qualité moyenne. Si l'effet externe est suffi-samment important, la perte de bien-être qui en résulte est croissante avec l'importance de Pexternalité elle-même. L'effet bénéfique d'une régulation par un standard de qualité minimum est analysé.

Keywords

externalité de positionnementrecherche de statutdifférenciation verticalestandard de qualitéD62L13L51positional externalitystatus seekingvertical differentiationquality standardD62L13L51
Type
Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 71 , Issue 4 , 2005 , pp. 367 - 381
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 2005 

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Footnotes

*

We thank an anonymous referee for precious comments and suggestions on an earlier draft. The usual disclaimer applies, [email protected]; [email protected]

**

ENCORE, Faculty of Economics & Econometrics, University of Amsterdam, Roeterstraat 11, WB1018 Amsterdam, The Netherlands.

***

Department of Economics, University of Bologna, Strada Maggiore 45, 40125 Bologna, Italy, fax +39-051-2092664.

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