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Standards vs. labels with imperfect competition and asymmetric information

Kenneth Baltzer ()

Economics Letters, 2012, vol. 114, issue 1, 61-63

Abstract: I demonstrate that providing information about product quality is not necessarily the best way to address asymmetric information problems when markets are imperfectly competitive. In a vertical differentiation model I show that a Minimum Quality Standard, which retains asymmetric information, generates more welfare than a label, which provides full information.

Keywords: Minimum quality standard; Label; Asymmetric information; Vertical differentiation; Product quality (search for similar items in EconPapers)
JEL-codes: L13 L15 L51 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (15)

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Working Paper: Standards vs. labels with imperfect competition and asymmetric information (2011) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:114:y:2012:i:1:p:61-63

DOI: 10.1016/j.econlet.2011.09.032

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