Minimum quality standards with more than two firms

Scarpa, Carlo

doi:10.1016/s0167-7187(96)01051-x

Cited by 88 publications

(65 citation statements)

References 6 publications

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“…Several authors have shown how minimum quality standards can raise welfare when products are vertically differentiated and buyers fully internalise the benefits of quality. By increasing the lowest quality level in the market, the regulator can intensify price competition to the benefit of consumers (Ronnen, 1991;Crampes and Hollander, 1995;Scarpa, 1998). However, in an industry in which firms can commit to a quality level before minimum quality standards are implemented, the centralised regulator will be induced to set a more lenient standard and social welfare will fall (Lutz, Lyon and Maxwell, 2000).…”

Section: Preemptive Self-regulationmentioning

confidence: 99%

Self-regulation

Ogus¹,

Carbonara²

2017

Encyclopedia of Law and Economics

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Section: Preemptive Self-regulationmentioning

confidence: 99%

Self-regulation

Ogus¹,

Carbonara²

2017

Encyclopedia of Law and Economics

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“…These models have also became part of consumers' theory, and were often applied for several purposes, namely Minimum quality standars (Scarpa, 1998), or to potential competition (Donnenfeld e Weber, 1995). Indeed, extensions of vertical differentiation theory were rather on firm competition, but never on alternative forms of consumers' behavior.…”

Section: Introductionmentioning

confidence: 99%

A model of consumer choice with vertically differentiated goods: reassessing the traditional demand theory and an application to tourism

Barbot

2013

J. Transp. Lit.

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Standard vertical differentiation models were designed for a type of consumer behaviour when each consumer buys a single unit of only one of two goods. However, in many other cases, consumers may buy a few units of both goods with different qualities. This case is not covered by theory yet. This paper intends to fill this gap, by modelling consumer behaviour and demand with vertical differentiation when all consumers may buy some mix of both qualities. Additionally, we find that two main results of the previous vertical differentiation literature do not apply in this case and show how the model can be extended to a number of situations. We also present an example of how the model may be applied to Tourism and Transport industries. ResumoModelos tradicionais de diferenciação vertical de produto foram projetados para um tipo de comportamento do consumidor quando cada consumidor compra uma única unidade de apenas um dos dois bens. No entanto, em muitos outros casos, os consumidores podem comprar poucas unidades de ambos os bens com qualidades diferentes. Este caso não é coberto pela teoria até o presente momento. Este trabalho pretende preencher esta lacuna, de forma a modelar o comportamento dos consumidores e a demanda com diferenciação vertical de produto quando todos os consumidores podem comprar alguma combinação de ambas as qualidades. Além disso, descobriu-se que dois resultados principais da literatura anterior de diferenciação vertical não se aplicam neste caso e mostrou-se como o modelo pode ser estendido para um número de situações. Apresentamos também um exemplo de como o modelo pode ser aplicado às indústrias Turismo e Transportes.

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“…A large part of this literature considers a context of perfect information about quality for consumers, as, for instance, in Ronnen (1991), Crampes andHollander (1995), Ecchia and Lambertini (1997), Scarpa (1998), Lutz et al (2000), Valletti (2000), Garella (2006) and Jinji and Toshimitsu (2004). Some other papers focus on the standard in a context of imperfect information for consumers, as in Leland (1979), Garella and Petrakis (2006), and Lapan and Moschini (2006).…”

Section: Introductionmentioning

confidence: 99%

Minimum safety standard, consumers’ information and competition

Marette

2007

J Regul Econ

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This paper explores the effects of a standard influencing care choice. Firm(s) may increase the probability of offering safe products by incurring a cost. Under duopoly, they compete either in prices or in quantities. Under perfect information about safety for consumers, the selected standard that corrects a safety underinvestment is always compatible with competition. Safety overinvestment only emerges under competition in quantities and relatively low values of the cost. Under imperfect information about safety for consumers, the standard leads to a monopoly situation. However, for relatively large values of the cost, a standard cannot impede the market failure coming from the lack of information. AbstractThis paper explores the effects of a standard influencing care choice. Firm(s) may increase the probability of offering safe products by incurring a cost. Under duopoly, they compete either in prices or in quantities. Under perfect information about safety for consumers, the selected standard that corrects a safety underinvestment is always compatible with competition. Safety overinvestment only emerges under competition in quantities and relatively low values of the cost. Under imperfect information about safety for consumers, the standard leads to a monopoly situation. However, for relatively large values of the cost, a standard cannot impede the market failure coming from the lack of information.

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Minimum quality standards with more than two firms

Cited by 88 publications

References 6 publications

Self-regulation

Self-regulation

A model of consumer choice with vertically differentiated goods: reassessing the traditional demand theory and an application to tourism

Minimum safety standard, consumers’ information and competition

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