Price Controls and the Behavior of the Firm
分析当产品质量可变时，价格管制对竞争性企业的产出和效率的影响，利用Leland的质量选择模型研究企业如何调整行为以应对价格约束。
This paper analyzes the impact of price controls upon the output and efficiency of the competitive firm when quality is a variable. It has long been recognized that price controls will induce firms to make adjustments along unregulated qualitative margins. The full consequences of this adjustment, however, have not been formally analyzed. The underpinnings of this paper are found in Leland's [1977] comprehensive theory of competitive quality choice. Leland's model adapts the characteristics approach of consumer theory, as developed by Lancaster [1966], Muth [1966], and Becker [1965], to the theory of the firm. In this paper, I shall utilize Leland's model to investigate the firm's adjustment to the constraint on its behavior imposed by a price control. In Section 2, 1 will set forth a model of a competitive firm for which product quality is a decision variable. Section 3 identifies the impact of price controls upon this firm's output and product quality. The effect of price controls on the industry equilibrium is identified in Section 4 and expanded in Section 5 to allow for entry or exit of firms as induced by the control.