Bernard, Christophe, Calmette, Marie-Françoise, Kilkenny, Maureen, Loustalan, Catherine and Pechoux, Isabelle (2014) Quality in Open Markets: How Larger Leads to Less. TSE Working Paper, n. 14-505, Toulouse

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Abstract

We show how a large country’s entrance on world markets can lead to lower and less quality diversity available to consumers rather than more. In our model, autarky quality is directly proportional to the willingness to pay for quality and home market size, and inversely proportional to the cost of quality. We formalize strategically interacting firms, and identify the context in which a low-quality producer can lead, driving high-quality producers out of the market despite the existence of customers willing to pay for higher quality. We discuss the feasibility of this ‘predatory strategy’ by an emerging country. It is more likely in contexts where the emerging exporter is much larger.

Item Type: Monograph (Working Paper)
Language: English
Date: June 2014
Place of Publication: Toulouse
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Institution: Université Toulouse 1 Capitole
Site: UT1
Date Deposited: 09 Jul 2014 17:46
Last Modified: 26 Jan 2024 09:58
OAI Identifier: oai:tse-fr.eu:28350
URI: https://publications.ut-capitole.fr/id/eprint/15953

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