<p>Please excuse me, I hardly know anything about economics yet.</p>

<p>When the quality of a product changes, the demand curve moves.  But what if there are different versions of a product, of varying qualities, on the market at the same time?  Is there standard way to model this?</p>

<p>For example, there are a lot of different restaurants of different qualities.  The quality is a subjective measure, but suppose it weren't.  I could draw one supply curve and one demand curve per restaurant.  Is there anything more interesting I could do?  For example something that takes account of the fact that a high-quality restaurant and a low-quality restaurant are to some extent substitutes for each other.  Does micro theory give any prediction about what the supply of different restaurants of different qualities will be?</p>

<p>If there's a better question like this that I could have asked, or a good keyword to search on, please tell me.</p>

CC BY-SA 3.0
2015-11-15T23:06:45.993Z
I think you want to read about product differentiation, most likely about vertical product differentiation.
https://en.wikipedia.org/wiki/Product_differentiation
Giskard
CC BY-SA 3.0
2015-11-15T23:14:23.110Z
@denesp thats almost a whole answer.
Jamzy
CC BY-SA 3.0
2015-11-16T10:04:44.730Z
@Jamzy I posted it as a comment because its main component is a link. Perhaps someone will elaborate.
Giskard
CC BY-SA 3.0
2015-11-16T17:46:46.113Z
Any elaboration is very welcome.
Hyperbolic Asker
<microeconomics><product-differentiation><monopolistic-competition>
What are some ways to add quality to the supply-demand model?
Hyperbolic Asker
# What are some ways to add quality to the supply-demand model?

(Asked by: username_0 on 2015-11-15)

Please excuse me, I hardly know anything about economics yet.

When the quality of a product changes, the demand curve moves. But what if there are different versions of a product, of varying qualities, on the market at the same time? Is there standard way to model this?

For example, there are a lot of different restaurants of different qualities. The quality is a subjective measure, but suppose it weren't. I could draw one supply curve and one demand curve per restaurant. Is there anything more interesting I could do? For example something that takes account of the fact that a high-quality restaurant and a low-quality restaurant are to some extent substitutes for each other. Does micro theory give any prediction about what the supply of different restaurants of different qualities will be?

If there's a better question like this that I could have asked, or a good keyword to search on, please tell me.

**Tags:** microeconomics, product-differentiation, monopolistic-competition

> **Comments:**
> **username_1**: I think you want to read about product differentiation, most likely about vertical product differentiation. https://en.wikipedia.org/wiki/Product_differentiation  
> **username_2**: @denesp thats almost a whole answer.  
> **username_1**: @username_2 I posted it as a comment because its main component is a link. Perhaps someone will elaborate.  
> **username_0**: Any elaboration is very welcome.  

---

## 0 answers

