Template-Type: ReDIF-Paper 1.0 Series: Tinbergen Institute Discussion Papers Creation-Date: 2008-07-14 Number: 08-068/1 Author-Name: Andrei Dubovik Author-Email: dubovik@tinbergen.nl Author-Workplace-Name: Erasmus University Rotterdam Author-Name: Maarten C.W. Janssen Author-Email: maarten.janssen@univie.ac.at Author-Workplace-Name: University of Vienna Title: Oligopolistic Competition in Price and Quality Abstract: This discussion paper led to an article in Games and Economic Behavior (2012), pp. 120-138.

We consider an oligopolistic market where firms compete in price and quality and where consumers are heterogeneous in knowledge: some consumers know both the prices and quality of the products offered, some know only the prices and some know neither. We show that two types of signalling equilibria are possible. Both are characterised by dispersion and Pareto-inefficiency of the price/quality offers. But, better price/quality combinations are signalled with lower prices in one type and with higher prices in the other type. Classification-JEL: D43; D83; L13; L15 Keywords: oligopoly; competition; price; quality; imperfect information; signalling File-Url: https://papers.tinbergen.nl/08068.pdf File-Format: application/pdf File-Size: 439653 bytes Handle: RePEc:tin:wpaper:20080068