Static Costs vs. Dynamic Benefits of a Minimum Quality Standard under Cournot Competition

Imposing a minimum quality standard (MQS) is conventionally regarded as harmful if firms compete in quantities. This, however, ignores dynamic effects. We show that an MQS can hinder collusion, resulting in dynamic welfare gains that reduce and may even outweigh the usual static losses. Verdicts on MQS thus depend even more on the market at hand than has been acknowledged.

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Year of publication:	2007-10
Authors:	Napel, Stefan ; Oldehaver, Gunnar
Institutions:	Turun Kauppakorkeakoulu, Turun Yliopisto
Subject:	minimal quality standard \| Cournot competition \| collusion

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Extent:	application/pdf
Series:	Discussion Papers. - ISSN 1796-3133.
Type of publication:	Book / Working Paper
Notes:	Number 23 3 pages long
Classification:	L41 - Monopolization; Horizontal Anticompetitive Practices ; L51 - Economics of Regulation ; L15 - Information and Product Quality; Standardization and Compatibility ; D43 - Oligopoly and Other Forms of Market Imperfection
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005342841