If at first you don't succeed... Profits, prices, and market structure in a model of quality with unknowable consumer heterogeneity

Kala Krishna, Tor Winston

Research output: Contribution to journalReview article

1 Scopus citations

Abstract

Why are higher quality niches seen as intrinsically more profitable in business circles? Why do high quality products sometimes have a low real price, whereas it is unusual to see low quality products with high real prices? Can markets have quality differentiation as well as quality bunching? How does the rate at which fixed costs change with quality affect market structure? In this article we develop a new model of quality that casts light on such issues.

Original languageEnglish (US)
Pages (from-to)573-597
Number of pages25
JournalInternational Economic Review
Volume44
Issue number2
DOIs
StatePublished - May 1 2003

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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