Minimum Quality Standards and Collusion

Giulio Ecchia and Luca Lambertini (luca.lambertini@unibo.it)

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: We model the introduction of a minimum quality standard in a vertically differentiated duopoly. We extend the literature in determining the standard endogenously, showing that the maximisation of social welfare entails an increase in the surplus accruing to consumers served by the low quality firm and a decrease in the surplus of the remaining consumers. Then, we consider the effects of the standard on the stability of price collusion, proving that the standard makes it more difficult for firms to collude if consumers are sufficiently rich.

Date: 1995-10
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Citations: View citations in EconPapers (61)

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Related works:
Journal Article: Minimum Quality Standards and Collusion (1997)
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Persistent link: https://EconPapers.repec.org/RePEc:bol:bodewp:235

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