Minimum Quality Standards as Facilitating Devices: An Example with Leapfrogging and Exit
AbstractThe recent extensive study of vertical product differentiation models has allowed for the analysis of international trade issues in the presence of country asymmetries in terms of product qualities, technology, costs, market size, and income. In the presence of such asymmetries, national industries will either be market leaders or be lagging behind in the international market place in terms of their product qualities. The resulting asymmetry in profits creates powerful incentives for lagging industries as well as their national governments to reverse this situation to their advantage, i.e. to induce ‘leapfrogging’ in terms of product qualities. This note presents an example where a minimum quality standard facilitates leapfrogging as well as exit of the foreign firm.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1522.
Date of creation: Nov 1996
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Find related papers by JEL classification:
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
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- Mina Baliamoune & Stefan Lutz, 2009.
"Preemption, Predation, and Minimum Quality Standards,"
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- Mina Baliamoune-Lutz & Stefan Lutz, 2010. "Pre-emption, Predation, and Minimum Quality Standards," International Economic Journal, Taylor & Francis Journals, vol. 24(1), pages 111-123.
- S Lutz, 2005.
"Regulatory Standards Can Lead to Predation,"
The School of Economics Discussion Paper Series
0509, Economics, The University of Manchester.
- Michael Kuhn, . "Low Quality Leadership in Vertically Differentiated Duopoly," Discussion Papers 00/38, Department of Economics, University of York.
- Kuhn, Michael, 2007. "Minimum quality standards and market dominance in vertically differentiated duopoly," International Journal of Industrial Organization, Elsevier, vol. 25(2), pages 275-290, April.
- Jaqueline Rothfels, 2000. "Environmental policy under product differentiation and asymmetric costs - Does Leapfrogging occur and is it worth it?," IWH Discussion Papers 124, Halle Institute for Economic Research.
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