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Tim Tyler's avatar

Price competition and quality competition are not mutually exclusive. Some firms sell high end stuff and compete on quality - others shift mountains of cheap goods - and compete on price. Sometimes the same firm uses both approaches with different product lines. Both approaches are doing pretty well on the internet - as far as I can tell. Robin cites no evidence of the internet lowering price competition. Surely, Bill was right: yay internet!

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Overcoming Bias Commenter's avatar

https://en.wikipedia.org/wi...

A classic model where two firms choose quantity independently. Prices arise from market clearing. Given market demand, firms can compute best-response functions to the other firm's quantity choice; equilibrium arises when each firm's strategy is the best response to the other's choice.

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