Menu Expand

Quality with Saturation Goods

Cite JOURNAL ARTICLE

Style

Pichler, E. Quality with Saturation Goods. Journal of Contextual Economics – Schmollers Jahrbuch, 117(4), 545-565. https://doi.org/10.3790/schm.117.4.545
Pichler, Eva "Quality with Saturation Goods" Journal of Contextual Economics – Schmollers Jahrbuch 117.4, 1997, 545-565. https://doi.org/10.3790/schm.117.4.545
Pichler, Eva (1997): Quality with Saturation Goods, in: Journal of Contextual Economics – Schmollers Jahrbuch, vol. 117, iss. 4, 545-565, [online] https://doi.org/10.3790/schm.117.4.545

Format

Quality with Saturation Goods

Pichler, Eva

Journal of Contextual Economics – Schmollers Jahrbuch, Vol. 117 (1997), Iss. 4 : pp. 545–565

Additional Information

Article Details

Pichler, Eva

Abstract

The present paper is dealing with the link between quality and market power in the context of saturation goods. Investigating the conditions of a quality improvement to increase demand elasticity, the findings suggest the existence of a saturation level which depends on quality. Following Lancasters approach to consumer theory, an appropriate definition of quality is proposed. This specification allows a natural interpretation of the bias of the quality choice by a monopolist. Furthermore, we investigate firm behavior both in an imperfect competitive output market, and in oligopoly to find that firms can build up market power and increase profits by improving quality. Thus a firm's competitiveness can be traced back to its ability to produce quality more efficiently than its competitors.