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Mutual Recognition versus National Treatment of Standards in a Classical Monopoly or Oligopoly

Listed author(s):
  • T. Huw Edwards

We examine strategic biases in the international regulation of monopolistic or oligopolistic industries, where a minimum vertical quality standard is imposed on a classical monopoly or duopoly, to correct an undersupply of quality. This differs from Hotelling-based studies, where the aim of minimum quality standards is to correct excessive product differentiation. It also allows examination of unbalanced trade, not considered in previous work. Noncooperative regulators tend to overregulate for profit-shifting reasons, though only when producers can vary standards across countries. However, even in this latter case, mutual recognition is only unambiguously welfare-improving when trade is balanced, and it reduces trade flows when quality is taken into account.

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Article provided by Mohr Siebeck, Tübingen in its journal Journal of Institutional and Theoretical Economics.

Volume (Year): 168 (2012)
Issue (Month): 3 (September)
Pages: 455-487

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Handle: RePEc:mhr:jinste:urn:sici:0932-4569(201209)168:3_455:mrvnto_2.0.tx_2-2
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  1. Costinot, Arnaud, 2008. "A Comparative Institutional Analysis of Agreements on Product Standards," University of California at San Diego, Economics Working Paper Series qt09f6660d, Department of Economics, UC San Diego.
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  4. Arora Seema & Cason Timothy N., 1995. "An Experiment in Voluntary Environmental Regulation: Participation in EPA's 33/50 Program," Journal of Environmental Economics and Management, Elsevier, vol. 28(3), pages 271-286, May.
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  10. Edwards Terence Huw, 2009. "Tariffs, Horizontal Regulatory Standards and Protection against Foreign Competitors," Global Economy Journal, De Gruyter, vol. 9(2), pages 1-27, June.
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