Can competition reduce quality?

Research, Article, Preprint English OPEN
Brekke, Kurt R. ; Siciliani, Luigi ; Straume, Odd Rune (2012)
  • Publisher: Universidade do Minho. Núcleo de Investigação em Políticas Económicas (NIPE)
  • Subject: 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.
    • jel: jel:D21 | jel:D43 | jel:L30 | jel:L13
      ddc: ddc:330

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... View more
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