report submitted Burkhard Hehenkamp author 37339 Oddvar M. Kaarbøe author 280 department 475 department SFB 901: SFB 901 project SFB 901 - A: SFB 901 - Project Area A project SFB 901 - A3: SFB 901 - Subproject A3 project 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. 2023 eng Quality competitionPrice regulationLocation choiceProduct differentiation Hehenkamp, Burkhard, and Oddvar M. Kaarbøe. <i>Price Regulation, Quality Competition and Location Choice with Costly Relocation</i>. @book{Hehenkamp_Kaarbøe, title={Price Regulation, Quality Competition and Location Choice with Costly Relocation}, author={Hehenkamp, Burkhard and Kaarbøe, Oddvar M.} } Hehenkamp B, Kaarbøe OM. <i>Price Regulation, Quality Competition and Location Choice with Costly Relocation</i>. B. Hehenkamp and O. M. Kaarbøe, <i>Price Regulation, Quality Competition and Location Choice with Costly Relocation</i>. . Hehenkamp, B., &#38; Kaarbøe, O. M. (n.d.). <i>Price Regulation, Quality Competition and Location Choice with Costly Relocation</i>. Hehenkamp, Burkhard, and Oddvar M. Kaarbøe. <i>Price Regulation, Quality Competition and Location Choice with Costly Relocation</i>, n.d. B. Hehenkamp, O.M. Kaarbøe, Price Regulation, Quality Competition and Location Choice with Costly Relocation, n.d. 440932023-04-20T17:12:18Z2023-04-20T17:16:24Z