A monopolist facing a market of heterogeneous consumers will distort the quality a rray. This paper explores three regulatory remedies-minimum quality s tandards (MQS), maximum price regulation (MPR), and rate of return re gulation (RORR)-that can counteract this distortion. MQS and MPR rais e...

A monopolist that sells in a market in which consumers differ in their willingness to pay for qua lity will distort and enlarge the range of products offered for sale. The authors examine the positive and normative impacts of remedies u sed to counteract such distortions. For the case of a price...