Publicação
A dynamic model of quality competition with endogenous prices
| Resumo: | We develop a dynamic model of price and quality competition in order to analyse the effects of competition intensity on quality provision and to which extent an unregulated market is able to provide a socially optimal quality level. Using a differential-game approach with price and quality competition on a Hotelling line, we compare the benchmark open-loop solution against the feedback closed-loop solution, which implies strategic dynamic interaction over time. We find that steady-state quality in the closed-loop solution is (i) increasing in the degree of competition between firms, (ii) lower than in the open-loop solution, and (iii) lower than the socially optimal level. In contrast, steady-state quality in the open-loop solution is at the socially optimal level and independent of competition intensity. Thus, our analysis identifies dynamic strategic interactions between competing firms as an independent source of inefficiency in quality provision. |
|---|---|
| Autores principais: | Cellini, Roberto |
| Outros Autores: | Siciliani, Luigi; Straume, Odd Rune |
| Assunto: | Competition Quality Differential-games Ciências Sociais::Economia e Gestão |
| Ano: | 2015 |
| País: | Portugal |
| Tipo de documento: | working paper |
| Tipo de acesso: | acesso aberto |
| Instituição associada: | Universidade do Minho |
| Idioma: | inglês |
| Origem: | RepositóriUM - Universidade do Minho |
| _version_ | 1867439769227624448 |
|---|---|
| author | Cellini, Roberto |
| author2 | Siciliani, Luigi Straume, Odd Rune |
| author2_role | author author |
| author_facet | Cellini, Roberto Siciliani, Luigi Straume, Odd Rune |
| author_role | author |
| contributor_name_str_mv | RepositóriUM - Universidade do Minho |
| country_str | PT |
| creators_json_txt | [{\"Person.name\":\"Cellini, Roberto\"},{\"Person.name\":\"Siciliani, Luigi\"},{\"Person.name\":\"Straume, Odd Rune\"}] |
| datacite.contributors.contributor.contributorName.fl_str_mv | RepositóriUM - Universidade do Minho |
| datacite.creators.creator.creatorName.fl_str_mv | Cellini, Roberto Siciliani, Luigi Straume, Odd Rune |
| datacite.date.Accepted.fl_str_mv | 2015-01-01T00:00:00Z |
| datacite.date.available.fl_str_mv | 2015-07-24T15:25:42Z |
| datacite.date.embargoed.fl_str_mv | 2015-07-24T15:25:42Z |
| datacite.rights.fl_str_mv | http://purl.org/coar/access_right/c_abf2 |
| datacite.subjects.subject.fl_str_mv | Competition Quality Differential-games Ciências Sociais::Economia e Gestão |
| datacite.titles.title.fl_str_mv | A dynamic model of quality competition with endogenous prices |
| dc.contributor.none.fl_str_mv | RepositóriUM - Universidade do Minho |
| dc.creator.none.fl_str_mv | Cellini, Roberto Siciliani, Luigi Straume, Odd Rune |
| dc.date.Accepted.fl_str_mv | 2015-01-01T00:00:00Z |
| dc.date.available.fl_str_mv | 2015-07-24T15:25:42Z |
| dc.date.embargoed.fl_str_mv | 2015-07-24T15:25:42Z |
| dc.format.none.fl_str_mv | application/pdf |
| dc.identifier.none.fl_str_mv | https://hdl.handle.net/1822/36422 |
| dc.language.none.fl_str_mv | eng |
| dc.publisher.none.fl_str_mv | Universidade do Minho. Núcleo de Investigação em Políticas Económicas (NIPE) |
| dc.rights.none.fl_str_mv | http://purl.org/coar/access_right/c_abf2 |
| dc.subject.none.fl_str_mv | Competition Quality Differential-games Ciências Sociais::Economia e Gestão |
| dc.title.fl_str_mv | A dynamic model of quality competition with endogenous prices |
| dc.type.none.fl_str_mv | http://purl.org/coar/resource_type/c_8042 |
| description | We develop a dynamic model of price and quality competition in order to analyse the effects of competition intensity on quality provision and to which extent an unregulated market is able to provide a socially optimal quality level. Using a differential-game approach with price and quality competition on a Hotelling line, we compare the benchmark open-loop solution against the feedback closed-loop solution, which implies strategic dynamic interaction over time. We find that steady-state quality in the closed-loop solution is (i) increasing in the degree of competition between firms, (ii) lower than in the open-loop solution, and (iii) lower than the socially optimal level. In contrast, steady-state quality in the open-loop solution is at the socially optimal level and independent of competition intensity. Thus, our analysis identifies dynamic strategic interactions between competing firms as an independent source of inefficiency in quality provision. |
| dirty | 0 |
| eu_rights_str_mv | openAccess |
| format | workingPaper |
| fulltext.url.fl_str_mv | https://repositorium.uminho.pt/bitstreams/7f1e4831-af21-4ee4-b6f3-72ce41617d73/download |
| id | rum_f2764c8a4e8e8ddfd9d9f5e2baa9b494 |
| identifier.url.fl_str_mv | https://hdl.handle.net/1822/36422 |
| instacron_str | repositorium |
| institution | Universidade do Minho |
| instname_str | Universidade do Minho |
| language | eng |
| network_acronym_str | rum |
| network_name_str | RepositóriUM - Universidade do Minho |
| oai_identifier_str | oai:repositorium.uminho.pt:1822/36422 |
| organization_str_mv | urn:organizationAcronym:repositorium |
| person_str_mv | Cellini, Roberto Siciliani, Luigi Straume, Odd Rune |
| publishDate | 2015 |
| publisher.none.fl_str_mv | Universidade do Minho. Núcleo de Investigação em Políticas Económicas (NIPE) |
| reponame_str | RepositóriUM - Universidade do Minho |
| repository_id_str | urn:repositoryAcronym:rum |
| service_str_mv | urn:repositoryAcronym:rum |
| spelling | engUniversidade do Minho. Núcleo de Investigação em Políticas Económicas (NIPE)porWe develop a dynamic model of price and quality competition in order to analyse the effects of competition intensity on quality provision and to which extent an unregulated market is able to provide a socially optimal quality level. Using a differential-game approach with price and quality competition on a Hotelling line, we compare the benchmark open-loop solution against the feedback closed-loop solution, which implies strategic dynamic interaction over time. We find that steady-state quality in the closed-loop solution is (i) increasing in the degree of competition between firms, (ii) lower than in the open-loop solution, and (iii) lower than the socially optimal level. In contrast, steady-state quality in the open-loop solution is at the socially optimal level and independent of competition intensity. Thus, our analysis identifies dynamic strategic interactions between competing firms as an independent source of inefficiency in quality provision.application/pdfporA dynamic model of quality competition with endogenous pricesCellini, RobertoSiciliani, LuigiStraume, Odd RuneHostingInstitutionOrganizationalRepositóriUM - Universidade do Minhoe-mailmailto:repositorium@usdb.uminho.ptrepositorium@usdb.uminho.pt2015-07-24T15:25:42Z20152015-01-01T00:00:00ZHandlehttps://hdl.handle.net/1822/36422http://purl.org/coar/access_right/c_abf2open accessCompetitionQualityDifferential-gameshttp://www.oecd.org/science/inno/38235147.pdfFields of Science and Technology (FOS)Ciências Sociais::Economia e Gestão493015 bytesother research producthttp://purl.org/coar/resource_type/c_8042working paperhttp://purl.org/coar/access_right/c_abf2application/pdffulltexthttps://repositorium.uminho.pt/bitstreams/7f1e4831-af21-4ee4-b6f3-72ce41617d73/download |
| spellingShingle | A dynamic model of quality competition with endogenous prices Cellini, Roberto Competition Quality Differential-games Ciências Sociais::Economia e Gestão |
| status | SINGLETON |
| subject.fl_str_mv | Competition Quality Differential-games |
| subject.other.fl_str_mv | Ciências Sociais::Economia e Gestão |
| title | A dynamic model of quality competition with endogenous prices |
| title_full | A dynamic model of quality competition with endogenous prices |
| title_fullStr | A dynamic model of quality competition with endogenous prices |
| title_full_unstemmed | A dynamic model of quality competition with endogenous prices |
| title_short | A dynamic model of quality competition with endogenous prices |
| title_sort | A dynamic model of quality competition with endogenous prices |
| topic | Competition Quality Differential-games Ciências Sociais::Economia e Gestão |
| topic_facet | Competition Quality Differential-games Ciências Sociais::Economia e Gestão |
| url | https://hdl.handle.net/1822/36422 |
| visible | 1 |