Journal of Political Economy Vol. 95 No. 4 1987
The Dissipation of Profits by Brand Name Investment and Entry When Price Guarantees Quality
Abstract
Two previous models of the dissipation of profits generated by the use of quality-guaranteeing prices assumed that pro fits were dissipated through investment in brand-name capital and ent ry. The model of this paper allows both possibilities. It is shown th at both types of dissipation will, in general, occur and that brand-n ame investment will dissipate a greater share of profits as the elast icity of consumer response to brand-name investment grows larger.
- DOI
- 10.1086/261486
- Volume
- 95
- Issue
- 4
- Pages
- 797-809
- Language
- en
- Sources
- crossref openalex