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Alexander Kemnitz and Cyrus Hemmasi
''Price ceilings and quality competition''
( 2003, Vol. 4 No.20 )
This paper investigates the quality implications of an upper limit on product prices in a vertically differentiated duopoly. It is shown that a price ceiling diminishes the incentives for strategic product differentiation, thereby improving average quality in the market.
JEL: D4 - Market Structure and Pricing: General
L1 - Market Structure, Firm Strategy, and Market Performance: General
Manuscript Received : Mar 26 2003 Manuscript Accepted : Apr 18 2003

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