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Competition vs. quality in an industry with imperfect traceability

Elodie Rouviere () and Raphael Soubeyran ()

Economics Bulletin, 2011, vol. 31, issue 4, 3052-3067

Abstract: We consider an industry where firms produce goods that have different quality levels but firms cannot differentiate themselves from rivals. In this situation, producing low-quality generates a negative externality on the whole industry. This is particularly true when consumers cannot identify producers. In this article, we show that under a "Laissez Faire" situation free entry is not socially optimal and we argue that the imposition of a Minimum Quality Standard (MQS) may induce firms to enter the market.

Keywords: Entry; Externality; Minimum Quality Standard; Quality. (search for similar items in EconPapers)
JEL-codes: L1 L5 (search for similar items in EconPapers)
Date: 2011-10-26
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http://www.accessecon.com/Pubs/EB/2011/Volume31/EB-11-V31-I4-P277.pdf (application/pdf)

Related works:
Working Paper: Competition vs. quality in an industry with imperfect traceability (2011) Downloads
Working Paper: COMPETITION VS. QUALITY IN AN INDUSTRY WITH IMPERFECT TRACEABILITY (2010) Downloads
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