Can competition reduce quality?
Research, Article, Preprint
Brekke, Kurt R.
Straume, Odd Rune
- Publisher: Universidade do Minho. Núcleo de Investigação em Políticas Económicas (NIPE)
D21 | D43 | Risk-averse providers | Quality and price competition; Motivated providers; Risk-averse providers | Motivated providers | L30 | quality and price competition, motivated providers, risk-averse providers | price competition | quality | L13 | Quality and price competition | Motivated providers; Quality and price competition; Risk-averse providers | Quality and price competition; Motivated providers; Risk-averse providers.
In a spatial competition setting there is usually a non-negative relationship between competition and quality. In this paper we offer a novel mechanism whereby competition leads to lower quality. This mechanism relies on two key assumptions, namely that the providers ar...
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