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Overcompliance with minimum quality standards

Author

Listed:
  • Lander Beloqui

    (Mondragon Unibertsitatea)

  • Jose M. Usategui

    () (Universidad del País Vasco/EHU)

Abstract

This paper presents an unnoticed result that may occur when an effective minimum quality standard is imposed in a duopoly model where firms decide on quality and prices in two stages and where both covered or uncovered markets may be endogenous outcomes of the competition game. We derive situations, associated to transitions induced by the standard from uncovered market to covered market, where the two firms decide to provide a quality level higher than the minimum quality required by the standard (Copyright: Fundación SEPI)

Suggested Citation

  • Lander Beloqui & Jose M. Usategui, 2004. "Overcompliance with minimum quality standards," Investigaciones Economicas, Fundación SEPI, vol. 28(2), pages 233-255, May.
  • Handle: RePEc:iec:inveco:v:28:y:2004:i:2:p:233-255
    as

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    References listed on IDEAS

    as
    1. Scarpa, Carlo, 1998. "Minimum quality standards with more than two firms1," International Journal of Industrial Organization, Elsevier, vol. 16(5), pages 665-676, September.
    2. Crampes, Claude & Hollander, Abraham, 1995. "Duopoly and quality standards," European Economic Review, Elsevier, vol. 39(1), pages 71-82, January.
    3. Jaskold Gabszewicz, J. & Thisse, J. -F., 1979. "Price competition, quality and income disparities," Journal of Economic Theory, Elsevier, vol. 20(3), pages 340-359, June.
    4. Lutz, Stefan & Lyon, Thomas P & Maxwell, John W, 1998. "Strategic Quality Choice with Minimum Quality Standards," CEPR Discussion Papers 1793, C.E.P.R. Discussion Papers.
    5. Stefanie Kirchhoff, 2000. "Green Business and Blue Angels," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 15(4), pages 403-420, April.
    6. Boom, Anette, 1995. "Asymmetric International Minimum Quality Standards and Vertical Differentiation," Journal of Industrial Economics, Wiley Blackwell, vol. 43(1), pages 101-119, March.
    7. Alberto Cavaliere, 2000. "Overcompliance and Voluntary Agreements," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 17(2), pages 195-202, October.
    8. Constantatos, Christos & Perrakis, Stylianos, 1999. "Free entry may reduce total willingness-to-pay1," Economics Letters, Elsevier, vol. 62(1), pages 105-112, January.
    9. Peitz, Martin, 1995. "Utility maximization in models of discrete choice," Economics Letters, Elsevier, vol. 49(1), pages 91-94, July.
    10. Ecchia, Giulio & Lambertini, Luca, 1997. "Minimum Quality Standards and Collusion," Journal of Industrial Economics, Wiley Blackwell, vol. 45(1), pages 101-113, March.
    11. Aoki, Reiko & Prusa, Thomas J., 1997. "Sequential versus simultaneous choice with endogenous quality," International Journal of Industrial Organization, Elsevier, vol. 15(1), pages 103-121, February.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Overcompliance; quality standards; market coverage; quality competition;

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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