Ensuring quality provision through capacity regulation under price competition
AbstractWe show in a simple duopoly model of vertical differentiation that when a welfare maximizing regulator wishes to ensure entry while avoiding strategic quality underprovision, regulating the incumbent's capacity is preferable to imposing a ÂMinimum Quality StandardÂ on products. In order to establish this result, we make an original contribution to the study of Bertrand-Edgeworth competition in a market with differentiated products.
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Bibliographic InfoPaper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers RP with number -2259.
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Note: In : The B.E. Journal of Theoretical Economics, 10(1) (Topics), Article 47
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Other versions of this item:
- Boccard Nicolas & Wauthy Xavier Y., 2010. "Ensuring Quality Provision through Capacity Regulation under Price Competition," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 10(1), pages 1-27, October.
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