Minimum Safety Standard, Consumers' Information, and Competition, The

Stéphan Marette ()

Food and Agricultural Policy Research Institute (FAPRI) Publications from Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University

Abstract: 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.

Keywords: information; market structure; safety; standard. JEL Classification: C L1; L5 (search for similar items in EconPapers)
Date: 2007-02
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Related works:
Working Paper: Minimum Safety Standard, Consumers' Information, and Competition, The (2007)
Working Paper: Minimum Safety Standard, Consumers’ Information, and Competition (The) (2007)
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Persistent link: http://EconPapers.repec.org/RePEc:ias:fpaper:07-wp441

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