A BEJTE Contributions article.

Abstract

The paper characterizes the optimal provision of quality by a monopolist facing a population of consumers with private valuation for quality. Unlike previous models by Mussa and Rosen (1978) and others, this paper assumes there is a mass of consumers who prefer the highest quality goods. I liken these consumers to snobs who demand the highest valued goods. I show that the quality supplied jumps discontinuously as the highest valued consumers are encountered and the variety of products is reduced as the population of snobs increases. I also show that only snobs may be supplied once their population grows to a critical size.

Submitted: August 29, 2005 · Accepted: March 5, 2006 · Published: March 31, 2006

Originally published in Contributions to Theoretical Economics.

Recommended Citation

Basov, Suren (2006) "Snobs and Quality Gaps," Contributions to Theoretical Economics: Vol. 6 : Iss. 1, Article 1.
Available at: http://www.bepress.com/bejte/contributions/vol6/iss1/art1