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Quality choice, the Coase problem, and a fixed cost function of quality: a note

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  • Tsuyoshi Toshimitsu

Abstract

Chi (1999) shows that the durable-good monopolist facing the Coase problem not only over-supplies, but decreases the price per unit of quality, so that the high-demanded consumers do not postpone their purchase. The results derived by Chi are re-examined in the case of a fixed cost function of quality and it is shown that his results are sensitive to the cost function of quality.

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  • Tsuyoshi Toshimitsu, 2005. "Quality choice, the Coase problem, and a fixed cost function of quality: a note," Applied Economics Letters, Taylor & Francis Journals, vol. 12(7), pages 453-455.
    • Handle: RePEc:taf:apeclt:v:12:y:2005:i:7:p:453-455
    DOI: 10.1080/13504850500109717
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    References listed on IDEAS

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    1. Motta, Massimo, 1993. "Endogenous Quality Choice: Price vs. Quantity Competition," Journal of Industrial Economics, Wiley Blackwell, vol. 41(2), pages 113-131, June.
    2. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
    3. Chi, Woody Chih-Yi, 1999. "Quality choice and the Coase problem," Economics Letters, Elsevier, vol. 64(1), pages 107-115, July.
    4. Coase, Ronald H, 1972. "Durability and Monopoly," Journal of Law and Economics, University of Chicago Press, vol. 15(1), pages 143-149, April.
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    Cited by:

    1. Morita, Hodaka & Nguyen, Xuan, 2021. "FDI and quality-enhancing technology spillovers," International Journal of Industrial Organization, Elsevier, vol. 79(C).
    2. Asano, Takao & Shibata, Akihisa, 2011. "Optimal pricing and quality choice of a monopolist under Knightian uncertainty," International Journal of Industrial Organization, Elsevier, vol. 29(6), pages 746-754.

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