The Econometric SocietyEdited by: Guido W. Imbens • Print ISSN: 0012-9682 • Online ISSN: 1468-0262
Econometrica: May, 1989, Volume 57, Issue 3
https://doi.org/0012-9682(198905)57:3<533:MD>2.0.CO;2-4
p. 533-557
Jean-Charles Rochet, Paul Champsaur
We study a differentiated industry in which two firms compete by offering intervals of qualities to heterogenous consumers, in the spirit of the monopolist of Mussa and Rosen (1978). We establish conditions which, for perfect competition and monopoly, preclude the possibility that a given quality level is bought by more than one type of consumer (there is no "bunching"). Under these assumptions we show the existence of a unique price equilibrium in the duopoly case where firms must offer intervals of qualities. At all price equilibria in which both firms make a positive profit, discrimination of consumers is incomplete. When the firms choose their product lines they are influenced by two opposite effects. Discrimination among heterogeneous buyers requires a broad quality range. On the contrary, price competition lowers profit margins on neighboring qualities sold by different firms, creating the Chamberlinian incentive for a firm to differentiate its products from those of its competitors. We show that the second effect dominates the first for intermediate qualities: at a Nash equilibrium of the quality game where each firm makes a positive profit, there is always a gap between the two product lines.
March 5, 2024
The terms of the Editors of the Econometric Society's three journals end June 30, 2025. We are pleased to announce the incoming Editors and to thank the outgoing Editors for their excellent and continuing service.
Econometrica: Since 2019, Guido Imbens has served as the 14th Editor of Econometrica. On July 1, 2025, Marina Halac will become the Editor.
Quantitative Economics: Stéphane Bonhomme has been the Editor of Quantitative Economics since 2021. His successor will be Bernard Salanié.
Theoretical Economics: The Editor of Theoretical Economics since 2021 has been Simon Board. Taking over for him in July 2025 will be Federico Echenique.
Guido, Stéphane, and Simon have been outstanding Editors. We are grateful to them for the work they have done and will continue to do, and we look forward to further congratulating them next year. We believe Marina, Bernard, and Federico will be outstanding successors and we thank them in advance for their service.
Finally, we are grateful to Larry Samuelson for chairing all three search committees, and we thank the search committee members for their hard and fruitful work:
Econometrica: Christian Dustmann, Lars Hansen, Alessandro Lizzeri, George Mailath, Ariel Pakes, Helene Rey, and Elie Tamer.
QE: Kate Ho, Michael Keane, Felix Kubler, Whitney Newey, and Frank Schorfheide.
TE: Jeff Ely, Johannes Horner, Gilat Levy, Meg Meyer, and Ran Spiegler.
