The Regulatory Choice between a Label and a Minimum-Quality Standard

Stephan Marette

No 18458, Hebrew University of Jerusalem Archive from Hebrew University of Jerusalem

Abstract: This paper revisits the issue of the regulatory choice between a mandatory label and a minimum-quality standard. When the cost of regulation is relatively low, we show that the socially optimal choice depends on the producers' cost structure for complying with regulation and improving quality. Under a marginal cost for improving quality, the mandatory labeling is sufficient for reaching the socially optimal level of quality. Under a fixed cost for improving quality, we show that each instrument or the combination of both instruments may emerge at the equilibrium.

Keywords: Marketing (search for similar items in EconPapers)
Pages: 30
Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:ags:hebarc:18458

DOI: 10.22004/ag.econ.18458

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