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Incidence of Strict Quality Standards: Protection of Consumers or Windfall for Professionals?

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Author Info

  • Kawaguchi, Daiji

    ()
    (Hitotsubashi University)

  • Murao, Tetsushi

    ()
    (Kyushu University)

  • Kambayashi, Ryo

    ()
    (Hitotsubashi University)

Abstract

This paper examines the effects of upgrading product quality standards on product and professional labor-market equilibriums when both markets are regulated. The Japanese government revised the Building Standards Act in June 2007, requiring a stricter review process for admitting the plans of large-scale buildings. This regulatory change increased the wage of certified architects in Tokyo by 30% but did not increase their total hours worked because of an inelastic labor supply. The stricter quality standards created a quasi-rent for certified architects and owners of condominiums at a cost to consumers. Evidence suggests that the stricter quality standards increased the transaction price of used condominiums by 15% in the Tokyo metropolitan area.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7443.

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Length: 58 pages
Date of creation: Jun 2013
Date of revision:
Publication status: forthcoming in: Journal of Law and Economics, 2014
Handle: RePEc:iza:izadps:dp7443

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Related research

Keywords: product standard; safety regulation; incidence of government regulation; labor market of professionals;

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