Endogenous Timing and Quality Standards in a Vertically Differentiated Duopoly

Giulio Ecchia () and Luca LAMBERTINI
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Luca LAMBERTINI: Department of Economics, University of Bologna, Italie

No 2001021, Discussion Papers (REL - Recherches Economiques de Louvain) from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: The consequences of the adoption of quality standards on the endogenous timing of moves are investigated in a vertically differentiated duopoly. We obtain two main results. First, we prove that, when the low-quality firm is Stackelberg leader in the quality stage, the related MQS is ineffective. Second, the timing game in the quality space has a unique equilibrium in pure strategies, involving simultaneous moves. The related optimal MQS is time consistent, although suboptimal from the viewpoint of the regulator.

Keywords: Minimum Quality Standard; extended game; endogenous timing (search for similar items in EconPapers)
JEL-codes: L13 (search for similar items in EconPapers)
Date: Written
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