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Minimum Quality Standard Under Cournot Competition and Pollution

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  • L. Lambertini
  • A. Tampieri

Abstract

We extend the analysis carried out by Valletti (2000) by considering an environmental externality in a vertically differentiated duopoly where firms compete la Cournot with fixed costs of quality improvement. We show that, if the weight of the external effect is high enough, the resulting minimum quality standard is indeed binding.

Suggested Citation

  • L. Lambertini & A. Tampieri, 2011. "Minimum Quality Standard Under Cournot Competition and Pollution," Working Papers wp749, Dipartimento Scienze Economiche, Universita' di Bologna.
    • Handle: RePEc:bol:bodewp:wp749
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    References listed on IDEAS

    as
    1. Stefan Lutz & Thomas P. Lyon & John W. Maxwell, 2000. "Quality Leadership when Regulatory Standards are Forthcoming," Journal of Industrial Economics, Wiley Blackwell, vol. 48(3), pages 331-348, September.
    2. Giulio Ecchia & Luca Lambertini, 1997. "Minimum Quality Standards and Collusion," Journal of Industrial Economics, Wiley Blackwell, vol. 45(1), pages 101-113, March.
    3. Motta, Massimo, 1993. "Endogenous Quality Choice: Price vs. Quantity Competition," Journal of Industrial Economics, Wiley Blackwell, vol. 41(2), pages 113-131, June.
    4. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
    5. 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.
    6. Ecchia, Giulio & Lambertini, Luca, 1997. "Minimum Quality Standards and Collusion," Journal of Industrial Economics, Wiley Blackwell, vol. 45(1), pages 101-113, March.
    7. Arora, Seema & Gangopadhyay, Shubhashis, 1995. "Toward a theoretical model of voluntary overcompliance," Journal of Economic Behavior & Organization, Elsevier, vol. 28(3), pages 289-309, December.
    8. Crampes, Claude & Hollander, Abraham, 1995. "Duopoly and quality standards," European Economic Review, Elsevier, vol. 39(1), pages 71-82, January.
    9. Andr, Francisco J. & Gonzlez, Paula & Porteiro, Nicols, 2009. "Strategic quality competition and the Porter Hypothesis," Journal of Environmental Economics and Management, Elsevier, vol. 57(2), pages 182-194, March.
    10. Bulow, Jeremy I & Geanakoplos, John D & Klemperer, Paul D, 1985. "Multimarket Oligopoly: Strategic Substitutes and Complements," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 488-511, June.
    11. Valletti, Tommaso M, 2000. "Minimum Quality Standards under Cournot Competition," Journal of Regulatory Economics, Springer, vol. 18(3), pages 235-245, November.
    12. Uri Ronnen, 1991. "Minimum Quality Standards, Fixed Costs, and Competition," RAND Journal of Economics, The RAND Corporation, vol. 22(4), pages 490-504, Winter.
    13. Lutz, Stefan & Lyon, Thomas P & Maxwell, John W, 2000. "Quality Leadership When Regulatory Standards Are Forthcoming," Journal of Industrial Economics, Wiley Blackwell, vol. 48(3), pages 331-348, September.
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    Cited by:

    1. Amir, Rabah & Gama, Adriana & Maret, Isabelle, 2019. "Environmental quality and monopoly pricing," Resource and Energy Economics, Elsevier, vol. 58(C).
    2. Rabah Amir & Adriana Gama & Katarzyna Werner, 2018. "On Environmental Regulation of Oligopoly Markets: Emission versus Performance Standards," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 70(1), pages 147-167, May.
    3. L. Lambertini & G. Pignataro & A. Tampieri, 2014. "Green Consumers, Greenwashing and the Misperception of Environmental Quality," Working Papers wp958, Dipartimento Scienze Economiche, Universita' di Bologna.
    4. L. Lambertini & A. Tampieri, 2012. "On the Emergence of Overcompliance with Endogenous Environmental Standards and Patronising Consumers," Working Papers wp847, Dipartimento Scienze Economiche, Universita' di Bologna.
    5. Dong, Quan & Chang, Yang-Ming, 2020. "Emission taxes vs. environmental standards under partial ownership arrangements," Research in Economics, Elsevier, vol. 74(3), pages 250-262.
    6. Lambertini, Luca & Pignataro, Giuseppe & Tampieri, Alessandro, 2020. "The effects of environmental quality misperception on investments and regulation," International Journal of Production Economics, Elsevier, vol. 225(C).

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    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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