Competition vs. quality in an industry with imperfect traceability

Abstract : We consider an industry where firms produce goods that have different quality levels but firms cannot differentiate themselves from rivals. In this situation, producing low-quality generates a negative externality on the whole industry. This is particularly true when consumers cannot identify producers. In this article, we show that under a "Laissez Faire" situation free entry is not socially optimal and we argue that the imposition of a Minimum Quality Standard (MQS) may induce firms to enter the market. The authors are very grateful to an anonymous referee and Quan Wen as an Associate Editor for their helpful comments and suggestions. We have also benefited from comments from Eric Brousseau, Julie Caswell, Gilles Grolleau, Emmanuel Raynaud, Alban Thomas, Antoine Soubeyran, Hubert Stahn, and Isabelle Vagneron on previous versions. Citation: Elodie Rouviere and Raphael Soubeyran, (2011) ''Competition vs. quality in an industry with imperfect traceability.
Document type :
Journal articles
Complete list of metadatas

Cited literature [15 references]  Display  Hide  Download

https://hal-agroparistech.archives-ouvertes.fr/hal-01323203
Contributor : Annabelle Filatre <>
Submitted on : Monday, May 30, 2016 - 11:31:19 AM
Last modification on : Tuesday, September 17, 2019 - 2:46:02 PM
Long-term archiving on : Wednesday, August 31, 2016 - 10:24:17 AM

File

6_competition vs quality.pdf
Publisher files allowed on an open archive

Identifiers

  • HAL Id : hal-01323203, version 1

Citation

Elodie Rouvière, Raphael Soubeyran. Competition vs. quality in an industry with imperfect traceability. Economics Bulletin, Economics Bulletin, 2011, 31 (4), pp.3052-3067. ⟨hal-01323203⟩

Share

Metrics

Record views

330

Files downloads

208