Producers bargaining over a quality standard

Arbeitspapier

We study an asymmetric information model in which two firms are active on a market where buyers only observe the average quality supplied. Quantities and cost structures are exogenously given and firms compete in quality. Before choosing their qualities, they bargain over a perfectly enforcable minimum quality standard. The bargaining outcome is given by the Kalai-Smorodinsky (KS) solution. Agreement on a binding standard is possible only if the firms are sufficiently similar with respect to their production costs. The agreed-upon standard always falls short of the joint-profit-maximizing (or, for that matter, the efficient) level. It is decreasing in the high-cost producer's cost of production. Yet, it first increases then decreases with the low-cost producer's cost of production, showing that the latter's bargaining position can be enhanced by seemingly adverse cost changes.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: SSE/EFI Working Paper Series in Economics and Finance ; No. 618

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection ; Asymmetric and Private Information; Mechanism Design ; Oligopoly and Other Imperfect Markets ; Information and Product Quality; Standardization and Compatibility
• Thema: asymmetric information ; minimum quality standard ; duopoly ; bargaining ; free riding ; Verarbeitendes Gewerbe ; Produktqualität ; Duopol ; Verhandlungen ; Trittbrettfahrerverhalten ; Asymmetrische Information

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Argenton, Cédric
• Ereignis: Veröffentlichung
• (wer): Stockholm School of Economics, The Economic Research Institute (EFI)
• (wo): Stockholm
• (wann): 2006

Weitere Informationen

• Handle: http://hdl.handle.net/10419/56127
• Letzte Aktualisierung: 10.03.2025, 11:42 MEZ