We revisit Maxwell's (1998) analysis to show that MQS regulation has no effects on the high-quality firm's incentive to adopt a more efficient technology in a vertically differentiated duopoly with full market coverage and convex costs of quality improvements which are independent of the scale...

We examine a vertically differentiated duopoly where firms invest in process and product innovation and then compete in prices under full market coverage. We show that (i) process and product innovation are complements (substitutes) for the low-quality (high-quality) firm; (ii) the firm which is...

We examine a vertically differentiated duopoly where firms invest in process and product innovation and then compete in prices under full market coverage. We show that (i) process and product innovation are complements (substitutes) for the low-quality (high-quality) firm; (ii) the firm which is...