Minimum Safety Standard, Consumers' Information, and Competition, The

Stéphan Marette ()

Center for Agricultural and Rural Development (CARD) Publications from Center for Agricultural and Rural Development (CARD) at Iowa State University

Abstract: This paper explores the effects of a standard influencing care choice. Firm(s) may increase the probability of offering safe products by incurring a cost. Under duopoly, they compete either in prices or in quantities. Under perfect information about safety for consumers, the selected standard that corrects a safety underinvestment is always compatible with competition. Safety overinvestment only emerges under competition in quantities and relatively low values of the cost. Under imperfect information about safety for consumers, the standard leads to a monopoly situation. However, for relatively large values of the cost, a standard cannot impede the market failure coming from the lack of information.

Keywords: information; market structure; safety; standard. (search for similar items in EconPapers)
JEL-codes: C L1 L5 (search for similar items in EconPapers)
Date: 2007-02
New Economics Papers: this item is included in nep-agr, nep-com and nep-mic
References: View complete reference list from CitEc
Citations: View citations in EconPapers (18)

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Related works:
Journal Article: Minimum safety standard, consumers’ information and competition (2007)
Working Paper: Minimum safety standard, consumer's information and competition (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:ias:cpaper:07-wp441

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