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Abstract

This paper considers a linear-pricing monopolist that conducts vertical product differentiation. Previous analyses consider customers who either have unit demand or firms who conduct nonlinear pricing. In this paper, customers’ opportunity cost of time generates a demand for quality. Customers differ in either their demand, income or taste for quality. Differences in income and taste for quality are sources of vertical differentiation. The presence of quality distortion and the variety that may exhibit it are dependent on the functional form of the customer types’ demand.

Item Type:	Article
Authors/Creators:	Sibly, H
Keywords:	linear pricing, customers
Journal or Publication Title:	Australian Economic Papers
Publisher:	Wiley-Blackwell Publishing Asia
ISSN:	1467-8454
DOI / ID Number:	https://doi.org/10.1111/1467-8454.12105
Copyright Information:	Copyright 2017 Flinders University and University of Adelaide and John Wiley & Sons Australia, Ltd.
Related URLs:	Google Scholar: Sibly, H UTAS Profile: Sibly, H
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