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Impacts of minimum quality standards in durable-goods markets

Author

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  • Guo, Wen-Chung
  • Su, Jia-Rui

Abstract

This study explores the welfare implications of minimum quality standards (MQS) in durable goods markets, contrasting them with the primary focus of existing research on nondurable-goods markets. Our findings show that MQS can improve social welfare in durable-goods markets by encouraging higher research and development levels and increasing overall market outputs. Our findings also suggest that deploying MQS strategically reduces quality disparities across firms, fostering more competition and benefiting consumers. Discussions on imperfect durability rates and the impact of horizontal product differentiation are also included.

Suggested Citation

  • Guo, Wen-Chung & Su, Jia-Rui, 2025. "Impacts of minimum quality standards in durable-goods markets," Economic Modelling, Elsevier, vol. 148(C).
    • Handle: RePEc:eee:ecmode:v:148:y:2025:i:c:s0264999325000689
    DOI: 10.1016/j.econmod.2025.107073
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    More about this item

    Keywords

    Minimum quality standards; Durable goods; Initial quality disparity; Quality-enhancing R&D; Welfare analysis;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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