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Quality certification standards in competitive markets: When consumers and producers (dis)agree

  • Lapan, Harvey
  • Moschini, GianCarlo

A quality certification standard in a competitive setting can improve welfare but may affect consumers and producers differently. In a competitive model with quality preferences of the vertical product differentiation type, we find that producers prefer a higher (lower) quality standard than consumers if individual demand functions are log-convex (log-concave).

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File URL: http://www.sciencedirect.com/science/article/B6V84-4W7J0VN-1/2/527f7258d1e7fd0ca7e83dbc56960b69
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Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 104 (2009)
Issue (Month): 3 (September)
Pages: 144-147

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Handle: RePEc:eee:ecolet:v:104:y:2009:i:3:p:144-147
Contact details of provider: Web page: http://www.elsevier.com/locate/ecolet

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  1. Champsaur, Paul & Rochet, Jean-Charles, 1989. "Multiproduct Duopolists," Econometrica, Econometric Society, vol. 57(3), pages 533-57, May.
  2. Leland, Hayne E, 1979. "Quacks, Lemons, and Licensing: A Theory of Minimum Quality Standards," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1328-46, December.
  3. Akerlof, George A, 1970. "The Market for 'Lemons': Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, MIT Press, vol. 84(3), pages 488-500, August.
  4. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
  5. AMIR, Rabah & TROGE, Michael & MARET, Isabelle, 2004. "On taxation pass-through for a monopoly firm," CORE Discussion Papers 2004039, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. Harvey Lapan & GianCarlo Moschini, 2007. "Grading, Minimum Quality Standards, and the Labeling of Genetically Modified Products," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(3), pages 769-783.
  7. Tim Baldenius & Stefan Reichelstein, 2000. "Comparative statics of monopoly pricing," Economic Theory, Springer, vol. 16(2), pages 465-469.
  8. Uri Ronnen, 1991. "Minimum Quality Standards, Fixed Costs, and Competition," RAND Journal of Economics, The RAND Corporation, vol. 22(4), pages 490-504, Winter.
  9. Lapan, Harvey E. & Moschini, GianCarlo, 2007. "AJAE Appendix: Grading, Minimum Quality Standards, and the Labeling of Genetically Modified Products," American Journal of Agricultural Economics Appendices, Agricultural and Applied Economics Association, vol. 89(3), August.
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