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Competition Vs. Quality In An Industry With Imperfect Traceability

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  • Rouviere, Elodie
  • Soubeyran, Raphael

Abstract

We consider an industry where firms produce goods that have different quality levels but firms cannot differentiate themselves from rivals. In this situation, producing low-quality generates a negative externality on the whole industry. This is particularly true when consumers cannot identify producers. In this article, we show that under a "Laissez Faire" situation free entry is not socially optimal and we argue that the imposition of a Minimum Quality Standard (MQS) may induce firms to enter the market.
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  • Rouviere, Elodie & Soubeyran, Raphael, 2010. "Competition Vs. Quality In An Industry With Imperfect Traceability," 115th Joint EAAE/AAEA Seminar, September 15-17, 2010, Freising-Weihenstephan, Germany 116407, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaa115:116407
    DOI: 10.22004/ag.econ.116407
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    References listed on IDEAS

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    Cited by:

    1. E. Rouvière & K. Latouche, 2014. "Impact of liability rules on modes of coordination for food safety in supply chains," European Journal of Law and Economics, Springer, vol. 37(1), pages 111-130, February.
    2. Fulvio Fontini & Katrin Millock & Michele Moretto, 2018. "Collective reputation with stochastic production and unknown willingness to pay for quality," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 20(2), pages 387-410, April.
    3. Rupayan Pal & Marcella Scrimitore & Ruichao Song, 2023. "Externalities, entry bias, and optimal subsidy policy for cleaner environment," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 25(1), pages 90-122, February.
    4. Jaeck Mélanie & Lifran Robert & Stahn Hubert, 2014. "Emergence of Organic Farming under Imperfect Competition: Economic Conditions and Policy Instruments," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 12(1), pages 1-14, January.
    5. Baniak Andrzej & Grajzl Peter, 2013. "Equilibrium and Welfare in a Model of Torts with Industry Reputation Effects," Review of Law & Economics, De Gruyter, vol. 9(2), pages 265-302, October.
    6. Mélanie Jaeck & Robert Lifran & Hubert Stahn, 2012. "Emergence of Organic Farming under Imperfect Competition: Economic Conditions and Incentives," Working Papers hal-02805961, HAL.
    7. Mélanie Jaeck & Robert Lifran & Hubert Stahn, 2012. "Emergence of Organic Farming under Imperfect Competition," AMSE Working Papers 1239, Aix-Marseille School of Economics, France.
    8. Rouvière, Elodie, 2016. "Small is beautiful: firm size, prevention and food safety," Food Policy, Elsevier, vol. 63(C), pages 12-22.
    9. Brishti Guha, 2017. "Moral hazard, Bertrand competition and natural monopoly," Journal of Economics, Springer, vol. 121(2), pages 153-171, June.
    10. Rouvière, Elodie & Royer, Annie, 2017. "Public Private Partnerships in food industries: A road to success?," Food Policy, Elsevier, vol. 69(C), pages 135-144.
    11. Martínez-Alvarez, V. & García-Bastida, P.A. & Martin-Gorriz, B. & Soto-García, M., 2014. "Adaptive strategies of on-farm water management under water supply constraints in south-eastern Spain," Agricultural Water Management, Elsevier, vol. 136(C), pages 59-67.

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    More about this item

    Keywords

    Agricultural and Food Policy; Consumer/Household Economics; Demand and Price Analysis; Food Consumption/Nutrition/Food Safety; Food Security and Poverty; Health Economics and Policy;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L5 - Industrial Organization - - Regulation and Industrial Policy

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