---
_id: '44093'
abstract:
- lang: eng
  text: We consider a model where for-profit providers compete in quality in a price-regulated
    market that has been opened to competition, and where the incumbent is located
    at the center of the market, facing high costs of relocation. The model is relevant
    in markets such as public health care, education and schooling, or postal services.
    We find that, when the regulated price is low or intermediate, the entrant strategically
    locates towards the corner of the market to keep the incumbent at the low monopoly
    quality level. For a high price, the entrant locates at the corner of the market
    and both providers implement higher quality compared to a monopoly. In any case,
    the entrant implements higher quality than the incumbent provider. Social welfare
    is always higher in a duopoly if the cost of quality is low. For higher cost levels
    welfare is non-monotonic in the price and it can be optimal to the regulator not
    to use its entire budget. Therefore, the welfare effect of entry depends on the
    price and the size of the entry cost, and the regulator should condition the decision
    to allow entry on an assessment of the entry cost.
author:
- first_name: Burkhard
  full_name: Hehenkamp, Burkhard
  id: '37339'
  last_name: Hehenkamp
- first_name: Oddvar M.
  full_name: Kaarbøe, Oddvar M.
  last_name: Kaarbøe
citation:
  ama: Hehenkamp B, Kaarbøe OM. <i>Price Regulation, Quality Competition and Location
    Choice with Costly Relocation</i>.
  apa: Hehenkamp, B., &#38; Kaarbøe, O. M. (n.d.). <i>Price Regulation, Quality Competition
    and Location Choice with Costly Relocation</i>.
  bibtex: '@book{Hehenkamp_Kaarbøe, title={Price Regulation, Quality Competition and
    Location Choice with Costly Relocation}, author={Hehenkamp, Burkhard and Kaarbøe,
    Oddvar M.} }'
  chicago: Hehenkamp, Burkhard, and Oddvar M. Kaarbøe. <i>Price Regulation, Quality
    Competition and Location Choice with Costly Relocation</i>, n.d.
  ieee: B. Hehenkamp and O. M. Kaarbøe, <i>Price Regulation, Quality Competition and
    Location Choice with Costly Relocation</i>. .
  mla: Hehenkamp, Burkhard, and Oddvar M. Kaarbøe. <i>Price Regulation, Quality Competition
    and Location Choice with Costly Relocation</i>.
  short: B. Hehenkamp, O.M. Kaarbøe, Price Regulation, Quality Competition and Location
    Choice with Costly Relocation, n.d.
date_created: 2023-04-20T17:12:18Z
date_updated: 2023-04-20T17:16:24Z
department:
- _id: '280'
- _id: '475'
jel:
- D43
- L13
- L51
keyword:
- Quality competition
- Price regulation
- Location choice
- Product differentiation
language:
- iso: eng
project:
- _id: '1'
  name: 'SFB 901: SFB 901'
- _id: '2'
  name: 'SFB 901 - A: SFB 901 - Project Area A'
- _id: '7'
  name: 'SFB 901 - A3: SFB 901 - Subproject A3'
publication_status: submitted
status: public
title: Price Regulation, Quality Competition and Location Choice with Costly Relocation
type: report
user_id: '37339'
year: '2023'
...