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Producers bargainin...
Producers bargaining over a quality standard
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- Argenton, Cédric (författare)
- Stockholm School of Economics,Handelshögskolan i Stockholm
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(creator_code:org_t)
- Economic Research Institute, Stockholm School of Economics, 2006
- Engelska.
- Relaterad länk:
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https://research.hhs...
Abstract
Ämnesord
Stäng
- 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.
Ämnesord
- SAMHÄLLSVETENSKAP -- Ekonomi och näringsliv -- Nationalekonomi (hsv//swe)
- SOCIAL SCIENCES -- Economics and Business -- Economics (hsv//eng)
Publikations- och innehållstyp
- ovr (ämneskategori)
- vet (ämneskategori)