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Snobs and Quality Gaps

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  • Basov Suren

    (Melbourne University)

Abstract

The paper characterizes the optimal provision of quality by a monopolist facing a population of consumers with private valuation for quality. Unlike previous models by Mussa and Rosen (1978) and others, this paper assumes there is a mass of consumers who prefer the highest quality goods. I liken these consumers to snobs who demand the highest valued goods. I show that the quality supplied jumps discontinuously as the highest valued consumers are encountered and the variety of products is reduced as the population of snobs increases. I also show that only snobs may be supplied once their population grows to a critical size.

Suggested Citation

  • Basov Suren, 2006. "Snobs and Quality Gaps," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 6(1), pages 1-10, March.
    • Handle: RePEc:bpj:bejtec:v:contributions.6:y:2006:i:1:n:1
    DOI: 10.2202/1534-5971.1254
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    References listed on IDEAS

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    More about this item

    Keywords

    screening; product line; quality gap;
    All these keywords.

    JEL classification:

    • C0 - Mathematical and Quantitative Methods - - General
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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