Publisher:
Duke University, Center for the History of Political Economy (CHOPE), Durham, NC
Abstract:
We trace the origins of the definition of the "quality variable" used in the theory of product differentiation, which states that quality is unanimously appreciated by consumers, entails a higher unit cost for firms, is unidimensional and continuous. We also document the transition from a diagrammatic treatment of the issue of product quality to an algebraic one in this theory. To do so, we examine two articles published a year apart in the American Economic Review: an article written by Lawrence Abbott (1953) and an article written by Robert Dorfman and Peter Otto Steiner (1954).