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Minimum Quality Standards in Hedonic Markets with Environmental Externalities

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  • G. Ecchia
  • L. Lambertini
  • A. Tampieri

Abstract

We investigate the introduction of a minimum quality standard (MQS) in a vertically differentiated duopoly with an environmental externality. We establish that the MQS bites only if the hedonic component of consumer preferences is sufficiently strong. Then, we illustrate an underlying tradeoff between the beneficial effects of quality enhancement on prices and the associated undesirable increase in the environmental externality.

Suggested Citation

  • G. Ecchia & L. Lambertini & A. Tampieri, 2011. "Minimum Quality Standards in Hedonic Markets with Environmental Externalities," Working Papers wp731, Dipartimento Scienze Economiche, Universita' di Bologna.
  • Handle: RePEc:bol:bodewp:wp731
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    File URL: http://amsacta.unibo.it/4510/1/WP731.pdf
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    References listed on IDEAS

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    1. C. Lombardini-Riipinen, 2005. "Optimal Tax Policy under Environmental Quality Competition," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 32(3), pages 317-336, November.
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    Cited by:

    1. Luca Lambertini & Giuseppe Pignataro & Alessandro Tampieri, 2014. "Green Consumers, Greenwashing and the Misperception of Environmental Quality," CREA Discussion Paper Series 14-21, Center for Research in Economic Analysis, University of Luxembourg.
    2. Luca Lambertini & Giuseppe Pignataro & Alessandro Tampieri, 2015. "The effect of Environmental Quality Misperception on Investments and Regulation," CREA Discussion Paper Series 15-01, Center for Research in Economic Analysis, University of Luxembourg.

    More about this item

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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