A Dynamic Perspective on Minimum Quality Standards under Cournot Competition

Stefan Napel and Gunnar Oldehaver

No 82, Working Papers from Bavarian Graduate Program in Economics (BGPE)

Abstract: Imposing a minimum quality standard (MQS) is conventionally regarded as harmful if firms compete in quantities. This, however, ignores its possible dynamic effects. We show that an MQS can hinder collusion, resulting in dynamic welfare gains that reduce and may outweigh the static losses which are caused by regulation's distortive effect on equilibrium qualities. Verdicts on MQS thus depend even more on the market structure at hand than has been acknowledged.

Keywords: Minimal quality standard; Cournot competition; collusion (search for similar items in EconPapers)
JEL-codes: D43 L15 L41 L51 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2009-09
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://bgpe.cms.rrze.uni-erlangen.de/files/2023/0 ... rnot-Competition.pdf First version, 2009 (application/pdf)

Related works:
Journal Article: A dynamic perspective on minimum quality standards under Cournot competition (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:bav:wpaper:082_napel

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