Impacts of minimum quality standards in durable-goods markets

Wen-Chung Guo and Jia-Rui Su

Economic Modelling, 2025, vol. 148, issue C

Abstract: This study explores the welfare implications of minimum quality standards (MQS) in durable goods markets, contrasting them with the primary focus of existing research on nondurable-goods markets. Our findings show that MQS can improve social welfare in durable-goods markets by encouraging higher research and development levels and increasing overall market outputs. Our findings also suggest that deploying MQS strategically reduces quality disparities across firms, fostering more competition and benefiting consumers. Discussions on imperfect durability rates and the impact of horizontal product differentiation are also included.

Keywords: Minimum quality standards; Durable goods; Initial quality disparity; Quality-enhancing R&D; Welfare analysis (search for similar items in EconPapers)
JEL-codes: D21 L11 L15 L51 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:148:y:2025:i:c:s0264999325000689

DOI: 10.1016/j.econmod.2025.107073

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