Who should be regulated: Genuine producers or third parties?
Keisuke Hattori and
Keisaku Higashida
Journal of Economics, 2023, vol. 138, issue 3, No 3, 249-286
Abstract:
Abstract This study develops a model in which a “genuine” producer supplying genuine products competes with competitive “third-party” producers supplying compatible third-party products. We use this model to examine (i) how the strategic behavior of the genuine producer to drive out third parties (running comparative advertising, establishing technical barriers) affects the market equilibrium, (ii) whether the government should regulate such behavior by the genuine producer, and (iii) whether the government should regulate the entry of firms that supply third-party products. We find that a small amount of spending on advertising and creating technical barriers improves social welfare. However, their amounts in market equilibrium are socially excessive because the negative effects (e.g., the cost of advertising and creating barriers and an increase in production cost for third parties) outweigh the positive effects (e.g., an increase in the consumption of the genuine product and mitigation of the distortion of insufficient supply). Furthermore, we find that prohibitive measures (e.g., prohibition of advertising and technical barriers, entry prohibition of third-party producers) may improve welfare.
Keywords: Genuine products; Advertising; Technical barriers; Anti-trust law (search for similar items in EconPapers)
JEL-codes: L13 L15 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)
Downloads: (external link)
http://link.springer.com/10.1007/s00712-022-00808-5 Abstract (text/html)
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:kap:jeczfn:v:138:y:2023:i:3:d:10.1007_s00712-022-00808-5
DOI: 10.1007/s00712-022-00808-5
Access Statistics for this article
Journal of Economics is currently edited by Giacomo Corneo
More articles in Journal of Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().