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| Author: | Bester, H. |
| Title: | Quality uncertainty mitigates product differentation. |
| Journal: | RAND Journal of Economics
1998 : WIN, VOL. 29:4, p.828-844 |
| Index terms: | Product quality Product development |
| Language: | eng |
| Abstract: | The author presents the idea that imperfect information about the (vertical) quality characteristics of goods reduces the sellers' incentives for horizontal product differentiation. As a result, the equilibrium outcome may be characterized by "minimum differentiation". In a spatial framework this implies that firms tend to choose head-on-competition by agglomerating at the same location. It may happen that consumers benefit from imperfect information about product quality. |
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