If It’s All the Same to You: Blurred Consumer Perception and Market Structure

Abstract

Consumers with bounded perception treat sufficiently similar goods as homogeneous. The effects of bounded perception on a vertically differentiated duopoly with sequential quality choice are examined. When quality entails fixed costs the market becomes more concentrated. When quality entails marginal costs, the second mover may profitably imitate the product of its rival, and the market is either more or less concentrated depending on how bounded perception is. When firms incur entry costs, neither firm may opt to produce when quality entails marginal costs, whereas at least one firm always produces when quality entails fixed costs.

Inhibition or promotion: the impact of carbon emission trading on market structure: evidence from China

“…Zhang, XH, and others have demonstrated increased energy costs for manufacturers based on implementing the carbon emission trading system, such as increased electricity price costs (Zhang et al, 2019). As the marginal cost of manufacturers increases, it is evident that different market structures will have different impact effects (Webb, 2017). For example, under the assumption of monopolistic manufacturers in a linear demand curve relationship and the Cournot model (Wang and Zhao, 2007), the marginal cost transfer rate is (the number of manufacturers affected by carbon emissions trading/the number of all manufacturers in the market+1).…”