Regulating quality: a comparison between minimum quality standards and mixed oligopoly

Iacopo Grassi

STUDI ECONOMICI, 2013, vol. 2013/109, issue 109, 25-44

Abstract: This paper compares two possible State interventions in a market where a vertical differentiable good is produced: minimum quality standards (MQS) and mixed competition. In the analysis of MQS I consider an endogenous standard, given by the maximization of the Social Welfare, and the possibility for the firms not to respect such a standard, selling a low quality illegal good. In the study of the mixed oligopoly I concentrate the analysis on sectors where there might be separation between managers (who set the prices maximizing the profit) and employees (who set the quality maximizing the social welfare). The main result is that in these sectors the presence of the public firm allows to increase the Social Welfare with respect to the case when the good is produced by private firms or by a firm regulated with MQS.

JEL-codes: H44 L13 L50 (search for similar items in EconPapers)
Date: 2013
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