Quality and location choices under price regulation

dc.contributor.author	Brekke, Kurt Richard
dc.contributor.author	Nuscheler, Robert
dc.contributor.author	Straume, Odd Rune
dc.date.accessioned	2006-07-14T12:17:43Z
dc.date.available	2006-07-14T12:17:43Z
dc.date.issued	2002-12
dc.identifier.issn	1503-2140
dc.identifier.uri	http://hdl.handle.net/11250/165732
dc.description.abstract	In a model of spatial competition, we analyse the equilibrium outcomes in markets where the product price is exogenous. Using an extended version of the Hotelling model, we assume that firms choose their locations and the quality of the product they supply. We derive the optimal price set by a welfarist regulator and find that this (second-best) price causes over-investment in quality and an insufficient degree of horizontal differentiation (compared with the first-best solution) if the cost of investing in product quality, or the transportation cost of consumers, is sufficiently high. Comparing with the case of price competition, we also identify a hitherto unnoticed benefit of regulation, namely improved locational efficiency.	en
dc.format.extent	2143779 bytes
dc.format.mimetype	application/pdf
dc.language.iso	eng	en
dc.publisher	SNF	en
dc.relation.ispartofseries	Working Paper	en
dc.relation.ispartofseries	2002:78	en
dc.subject	spatial competition	en
dc.subject	product quality	en
dc.subject	location	en
dc.subject	price regulation	en
dc.title	Quality and location choices under price regulation	en
dc.type	Working paper	en