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| Author: | Ecchia, G. Lambertini, L. |
| Title: | Minimum quality standards and collusion |
| Journal: | Journal of Industrial Economics
1997 : MAR, VOL. 45:1, p. 101-114 |
| Index terms: | INDUSTRIAL ECONOMICS QUALITY STANDARDS |
| Language: | eng |
| Abstract: | The authors model the introduction of a minimum quality standard in a vertically differentiated duopoly. They extend the literature by 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, the authors 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. |
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