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Type	Working Paper
Scope	Discipline-based scholarship
Title	The welfare effects of endogenous quality choice in cable television markets
Organization Unit	Department of Economics (Florian Scheuer)
Authors	Gregory S. Crawford Oleksandr Shcherbakov Matthew Shum
Language	English
Institution	University of Zurich
Series Name	Working paper series / Department of Economics
Number	202
ISSN	1664-7041
Number of Pages	40
Date	2015
Abstract Text	We measure the welfare consequences of endogenous quality choice in imperfectly competitive markets. We introduce the concept of a "quality markup" and measure the relative importance for welfare of market power over price versus market power over quality. For U.S. cable-television markets between 1997-2006, we find that prices are 33% to 74% higher and qualities 23% to 55% higher than socially optimal. This "quality inflation" contradicts classic results in the literature and reflects our flexible specification of consumer preferences. Furthermore, we find market power over quality is responsible for 54% of the total welfare change from endogenous prices and qualities.
Related URLs	http://www.econ.uzh.ch/static/workingpapers.php https://www.econ.uzh.ch/en/research/workingpapers.html
Other Identification Number	merlin-id:12294
PDF File	Download from ZORA
Export	BibTeX EP3 XML (ZORA)
Keywords	Industrial organization, endogenous quality, imperfect competition, monopoly, cable television, quality distortions, welfare, quality markup, Industrieökonomie, Qualität, Unvollständige Konkurrenz, Marktmacht, Preisstruktur, Wohlstand, Kabelfernsehen, USA