Ensuring Quality Provision through Capacity Regulation under Price Competition
Nicolas Boccard () and
The B.E. Journal of Theoretical Economics, 2010, vol. 10, issue 1, 1-27
We show in a simple duopoly model of vertical differentiation that when a welfare maximizing regulator wishes to ensure entry while avoiding strategic quality underprovision, regulating the incumbent's capacity is preferable to imposing a "Minimum Quality Standard" on products. In order to establish this result, we make an original contribution to the study of Bertrand-Edgeworth competition in a market with differentiated products.
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Working Paper: Ensuring quality provision through capacity regulation under price competition (2010)
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