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Is a Minimum Quality Standard Socially Optimal?

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  • Stephan Marette

    (UMR Economie Publique INRA)

Abstract

This paper explores the role of a minimum quality standard when the quality choice is discrete. A minimum quality standard is never a socially optimal policy under Bertrand and Cournot competition. Conversely, it is often optimal to subsidize or tax the high quality in order to implement different firms' choices corresponding to a situation of welfare maximization.

Suggested Citation

  • Stephan Marette, 2008. "Is a Minimum Quality Standard Socially Optimal?," Economics Bulletin, AccessEcon, vol. 12(39), pages 1-8.
    • Handle: RePEc:ebl:ecbull:eb-08l50013
    as

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    References listed on IDEAS

    as
    1. Uri Ronnen, 1991. "Minimum Quality Standards, Fixed Costs, and Competition," RAND Journal of Economics, The RAND Corporation, vol. 22(4), pages 490-504, Winter.
    2. Valletti, Tommaso M, 2000. "Minimum Quality Standards under Cournot Competition," Journal of Regulatory Economics, Springer, vol. 18(3), pages 235-245, November.
    3. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
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    JEL classification:

    • L5 - Industrial Organization - - Regulation and Industrial Policy

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