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The Regulatory Choice between a Label and a Minimum-Quality Standard

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  • Marette, Stephan

Abstract

This paper revisits the issue of the regulatory choice between a mandatory label and a minimum-quality standard. When the cost of regulation is relatively low, we show that the socially optimal choice depends on the producers' cost structure for complying with regulation and improving quality. Under a marginal cost for improving quality, the mandatory labeling is sufficient for reaching the socially optimal level of quality. Under a fixed cost for improving quality, we show that each instrument or the combination of both instruments may emerge at the equilibrium.

Suggested Citation

  • Marette, Stephan, 2005. "The Regulatory Choice between a Label and a Minimum-Quality Standard," Hebrew University of Jerusalem Archive 18458, Hebrew University of Jerusalem.
    • Handle: RePEc:ags:hebarc:18458
    DOI: 10.22004/ag.econ.18458
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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