Monopoly Distortions in Durability and Multi-Dimensional Quality

Strausz, Roland (September 2009): Monopoly Distortions in Durability and Multi-Dimensional Quality. SFB/TR 15 Discussion Paper No. 271

Abstract

I show that Swan’s (1970) independence result requires a multiplicative interaction between durability and all other quality attributes. Because there is no compelling argument for a multiplicativity in quality, monopolists tend to distort durability, even with constant marginal costs. Distortions in durability and other quality aspects are aligned exactly when the marginal cost of quality do not increase too much with durability.

• Item Type: Paper (Discussion Paper)
• Keywords: Durability, quality, monopoly
• Collections: Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems; Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems > A1 - Allokationsmechanismen in Organisationen und Märkten
• Subjects: 300 Social sciences > 330 Economics
• Language: English