We study the social welfare optimum for a vertically differentiated duopoly under partial market coverage and variable costs. Costs are specified as linear in quantity and quadratic in quality. We demonstrate that the spread of product quality observed under a profit maximizing duopoly is too high, relative to the social welfare optimum. We also find that high quality firms in a duopoly will ha...

We study personalized price competition with costly advertising among n quality-cost differentiated firms. Strategies involve mixing over both prices and whether to advertise. In equilibrium, only the top two firms advertise, earning “Bertrand-like” profits. Social efficiency is U-shaped in the ad cost, with losses due to excessive advertising and sales by the “wrong” firm. Quality or cost impr...

For the Cournot model, several authors studied the impact of a marginal cost variation on consumers’ surplus, firms’ profits and social welfare. We unify and extend the results when all the marginal costs change simultaneously, the direction and the magnitude of the variation being firm-specific.

a r t i c l e i n f o This paper investigates how socially responsible behaviour influences firms' profits and social welfare when production entails an environmental externality. We study a Cournot oligopoly with pollution, with one CSR operating in the market. A CSR firm not only takes into account its profits but also internalises its own share of pollution and is sensitive to consumer surpl...