Mutual Recognition versus National Treatment of Standards in a Classical Monopoly or Oligopoly
AbstractWe examine strategic biases in the international regulation of monopolistic or oligopolistic industries, where a minimum vertical quality standard is imposed on a classical monopoly or duopoly, to correct an undersupply of quality. This differs from Hotelling-based studies, where the aim of minimum quality standards is to correct excessive product differentiation. It also allows examination of unbalanced trade, not considered in previous work. Noncooperative regulators tend to overregulate for profit-shifting reasons, though only when producers can vary standards across countries. However, even in this latter case, mutual recognition is only unambiguously welfare-improving when trade is balanced, and it reduces trade flows when quality is taken into account.
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Bibliographic InfoArticle provided by Mohr Siebeck, Tübingen in its journal Journal of Institutional and Theoretical Economics.
Volume (Year): 168 (2012)
Issue (Month): 3 (September)
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Find related papers by JEL classification:
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- F15 - International Economics - - Trade - - - Economic Integration
- C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
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