Minimum Quality Standards and Collusion

Giulio Ecchia () and Luca Lambertini ()

Journal of Industrial Economics, 1997, vol. 45, issue 1, pages 101-13

Abstract: The authors model the introduction of a minimum quality standard in a vertically differentiated duopoly. They extend the literature by determining the standard endogenously, showing that the maximization of social welfare entails an increase in the surplus accruing to consumers served by the low quality firm and a decrease in the surplus of the remaining consumers. Then, the authors consider the effects of the standard on the stability of price collusion, proving that the standard makes it more difficult for firms to collude if consumers are sufficiently rich. Copyright 1997 by Blackwell Publishing Ltd

Date: 1997
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Working Paper: Minimum Quality Standards and Collusion (1995)
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