Full vs Partial Market Coverage with Minimum Quality Standards

Giulio Ecchia and Luca Lambertini ()

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: The consequences of the adoption of quality standards on the extent of market coverage is investigated by modelling a game between regulator and low-quality firm in a vertically differentiated duopoly. The game has a unique equilibrium in the most part of the parameter range. There exists a non-negligible range where the game has no equilibrium in pure strategies. This result questions the feasibility of MQS regulation when firms endogenously determine market coverage.

Date: 1997-09
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Persistent link: https://EconPapers.repec.org/RePEc:bol:bodewp:285

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