Quality and location choices under price regulation

Arbeitspapier

In a model of spatial competition, we analyse the equilibrium outcomes in markets where the product price is exogenous. Using an extended version of the Hotelling model, we assume that firms choose their locations and the quality of the product they supply. We derive the optimal price set by a welfarist regulator and find that this (second-best) price causes over-investment in quality and an insufficient degree of horizontal differentiation (compared with the first-best solution) if the cost of investing in product quality, or the transportation cost of consumers, is sufficiently high. By comparing the case of price competition, we also identify a hitherto unnoticed benefit of regulation, namely improved locational efficiency.

Angaben zum Objekt

• Weitere Titel: Qualitäts- und Standortwahl bei Preisregulierung
• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: WZB Discussion Paper ; No. FS IV 02-28

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Oligopoly and Other Imperfect Markets ; Regulation and Industrial Policy: General ; Real Estate Markets, Spatial Production Analysis, and Firm Location: General ; Production Analysis and Firm Location: Government Policy
• Thema: Spatial competition ; product quality ; location ; price regulation

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Brekke, Kurt R. ; Nuscheler, Robert ; Straume, Odd Rune
• Ereignis: Veröffentlichung
• (wer): Wissenschaftszentrum Berlin für Sozialforschung (WZB)
• (wo): Berlin
• (wann): 2002

Weitere Informationen

• Handle: http://hdl.handle.net/10419/51092
• Letzte Aktualisierung: 10.03.2025, 11:45 MEZ