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

  • Stéphan Marette

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.

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File URL: http://www.card.iastate.edu/publications/DBS/PDFFiles/05wp416.pdf
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Paper provided by Center for Agricultural and Rural Development (CARD) at Iowa State University in its series Center for Agricultural and Rural Development (CARD) Publications with number 05-wp416.

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Date of creation: Dec 2005
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Handle: RePEc:ias:cpaper:05-wp416
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  1. Crampes, C. & Hollander, A., 1992. "How Many Karats Is Gold: Welfare Effects of Easing a Denomination Standard," Papers 92.271, Toulouse - GREMAQ.
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