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Minimum Quality Standards and Predatory Behaviour

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  • L. Lambertini
  • C. Scarpa

Abstract

This paper shows that the introduction of a premium quality standard can have repercussions on the market structure, opening the possibility of predatory behavior. The predatory equilibrium exists independently of whether or not adjustment costs are present. Moreover, whenever predation is an equilibrium, it is selected by the risk dominance criteria.

Suggested Citation

  • L. Lambertini & C. Scarpa, 1999. "Minimum Quality Standards and Predatory Behaviour," Working Papers 353, Dipartimento Scienze Economiche, Universita' di Bologna.
    • Handle: RePEc:bol:bodewp:353
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    References listed on IDEAS

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    1. Constantatos, Christos & Perrakis, Stylianos, 1997. "Vertical differentiation: Entry and market coverage with multiproduct firms," International Journal of Industrial Organization, Elsevier, vol. 16(1), pages 81-103, November.
    2. Giulio Ecchia & Luca Lambertini, 1997. "Minimum Quality Standards and Collusion," Journal of Industrial Economics, Wiley Blackwell, vol. 45(1), pages 101-113, March.
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    4. Constantatos, Christos & Perrakis, Stylianos, 1998. "Minimum Quality Standards, Entry, and the Timing of the Quality Decision," Journal of Regulatory Economics, Springer, vol. 13(1), pages 47-58, January.
    5. 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.
    6. Donnenfeld, Shabtai & Weber, Shlomo, 1992. "Vertical product differentiation with entry," International Journal of Industrial Organization, Elsevier, vol. 10(3), pages 449-472, September.
    7. William T. Gormley, 1991. "State regulations and the availability of child-care services," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 10(1), pages 78-95.
    8. Tasneem Chipty & Ann Dryden Witte, 1997. "An Empirical Investigation of Firms' Responses to Minimum Standards Regulations," NBER Working Papers 6104, National Bureau of Economic Research, Inc.
    9. Shabtai Donnenfeld & Shlomo Weber, 1995. "Limit Qualities and Entry Deterrence," RAND Journal of Economics, The RAND Corporation, vol. 26(1), pages 113-130, Spring.
    10. repec:bla:jindec:v:45:y:1997:i:1:p:101-13 is not listed on IDEAS
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    Cited by:

    1. Bonroy, Olivier, 2003. "Minimum Quality Standard and Protectionism," Cahiers de recherche 0302, GREEN.

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