Regulating quality: a comparison between minimum quality standards and mixed oligopoly

Author/s Iacopo Grassi
Publishing Year 2014 Issue 2013/109 Language English
Pages 20 P. 25-44 File size 157 KB
DOI 10.3280/STE2013-109002
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This paper compares two possible State interventions in a market where a vertical differentiable good is produced: minimum quality standards (MQS) and mixed competition. In the analysis of MQS I consider an endogenous standard, given by the maximization of the Social Welfare, and the possibility for the firms not to respect such a standard, selling a low quality illegal good. In the study of the mixed oligopoly I concentrate the analysis on sectors where there might be separation between managers (who set the prices maximizing the profit) and employees (who set the quality maximizing the social welfare). The main result is that in these sectors the presence of the public firm allows to increase the Social Welfare with respect to the case when the good is produced by private firms or by a firm regulated with MQS.

Keywords: MQS, mixed oligopoly, quality, regulation, piracy.

Jel codes: L13, L50, H44

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Iacopo Grassi, Regulating quality: a comparison between minimum quality standards and mixed oligopoly in "STUDI ECONOMICI " 109/2013, pp 25-44, DOI: 10.3280/STE2013-109002