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Overcompliance with minimum quality standards

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  • Lander Beloqui

    (Mondragon Unibertsitatea)

  • Jose M. Usategui

    ()
    (Universidad del País Vasco/EHU)

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    Abstract

    This paper presents an unnoticed result that may occur when an effective minimum quality standard is imposed in a duopoly model where firms decide on quality and prices in two stages and where both covered or uncovered markets may be endogenous outcomes of the competition game. We derive situations, associated to transitions induced by the standard from uncovered market to covered market, where the two firms decide to provide a quality level higher than the minimum quality required by the standard (Copyright: Fundación SEPI)

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    File URL: ftp://ftp.fundacionsepi.es/InvEcon/paperArchive/May2004/v28i2a2.pdf
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    Bibliographic Info

    Article provided by Fundación SEPI in its journal Investigaciones Económicas.

    Volume (Year): 28 (2004)
    Issue (Month): 2 (May)
    Pages: 233-255

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    Handle: RePEc:iec:inveco:v:28:y:2004:i:2:p:233-255

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    Postal: Investigaciones Economicas Fundación SEPI Quintana, 2 (planta 3) 28008 Madrid Spain
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    Related research

    Keywords: Overcompliance; quality standards; market coverage; quality competition;

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    References

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    1. Aoki, Reiko & Prusa, Thomas J., 1997. "Sequential versus simultaneous choice with endogenous quality," International Journal of Industrial Organization, Elsevier, vol. 15(1), pages 103-121, February.
    2. GABSZEWICZ, Jean J. & THISSE, Jacques-François, . "Price competition, quality and income disparities," CORE Discussion Papers RP -370, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    3. Crampes, C. & Hollander, A., 1991. "Duopoly and Quality Standards," Cahiers de recherche 9128, Universite de Montreal, Departement de sciences economiques.
    4. Constantatos, Christos & Perrakis, Stylianos, 1999. "Free entry may reduce total willingness-to-pay1," Economics Letters, Elsevier, vol. 62(1), pages 105-112, January.
    5. Stefanie Kirchhoff, 2000. "Green Business and Blue Angels," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 15(4), pages 403-420, April.
    6. Peitz, Martin, 1995. "Utility maximization in models of discrete choice," Economics Letters, Elsevier, vol. 49(1), pages 91-94, July.
    7. Alberto Cavaliere, 2000. "Overcompliance and Voluntary Agreements," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 17(2), pages 195-202, October.
    8. Boom, Anette, 1995. "Asymmetric International Minimum Quality Standards and Vertical Differentiation," Journal of Industrial Economics, Wiley Blackwell, vol. 43(1), pages 101-19, March.
    9. Lutz, Stefan & Lyon, Thomas P & Maxwell, John W, 1998. "Strategic Quality Choice with Minimum Quality Standards," CEPR Discussion Papers 1793, C.E.P.R. Discussion Papers.
    10. Scarpa, Carlo, 1998. "Minimum quality standards with more than two firms1," International Journal of Industrial Organization, Elsevier, vol. 16(5), pages 665-676, September.
    11. Ecchia, Giulio & Lambertini, Luca, 1997. "Minimum Quality Standards and Collusion," Journal of Industrial Economics, Wiley Blackwell, vol. 45(1), pages 101-13, March.
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