Static Costs vs. Dynamic Benefits of a Minimum Quality Standard under Cournot Competition
AbstractImposing a minimum quality standard (MQS) is conventionally regarded as harmful if firms compete in quantities. This, however, ignores dynamic effects. We show that an MQS can hinder collusion, resulting in dynamic welfare gains that reduce and may even outweigh the usual static losses. Verdicts on MQS thus depend even more on the market at hand than has been acknowledged.
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Bibliographic InfoPaper provided by Aboa Centre for Economics in its series Discussion Papers with number 23.
Date of creation: Oct 2007
Date of revision:
minimal quality standard; Cournot competition; collusion;
Find related papers by JEL classification:
- L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
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