Minimum Quality Standards under Asymmetric Duopoly with Endogenous Quality Ordering: A Note

Jinji, Naoto; Toshimitsu, Tsuyoshi

doi:10.1023/b:rege.0000038931.63101.0d

Cited by 19 publications

(18 citation statements)

References 9 publications

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“…We restrict our attention to the Cournot competition. By using notations from section 2, the inverse demand is equal to ( ) case, results would be close to the ones presented by Ronnen (1991), Valletti (2000), and Jinji and Toshimitsu (2004). Under asymmetric information about this level of effort, the possibility for each firm to signal its level of effort (equal to the probability of offering safe products) would be similar to ones presented by Daughety and Reinganum (1997).…”

Section: Information About Average Safety Effortsupporting

confidence: 58%

“…A large part of this literature considers a context of perfect information about quality for consumers, as, for instance, in Ronnen (1991), Crampes andHollander (1995), Ecchia and Lambertini (1997), Scarpa (1998), Lutz et al (2000), Valletti (2000), Garella (2006) and Jinji and Toshimitsu (2004). Some other papers focus on the standard in a context of imperfect information for consumers, as in Leland (1979), Garella and Petrakis (2006), and Lapan and Moschini (2006).…”

Section: Introductionmentioning

confidence: 99%

“…First, the literature on MQS points toward a difference between Bertrand and Cournot competition under perfect information (see Valletti, 2000, andJinji andToshimitsu, 2004). In particular, the MQS is not used under Cournot competition since it reduces welfare.…”

Section: Introductionmentioning

confidence: 99%

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Minimum safety standard, consumers’ information and competition

Marette

2007

J Regul Econ

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This paper explores the effects of a standard influencing care choice. Firm(s) may increase the probability of offering safe products by incurring a cost. Under duopoly, they compete either in prices or in quantities. Under perfect information about safety for consumers, the selected standard that corrects a safety underinvestment is always compatible with competition. Safety overinvestment only emerges under competition in quantities and relatively low values of the cost. Under imperfect information about safety for consumers, the standard leads to a monopoly situation. However, for relatively large values of the cost, a standard cannot impede the market failure coming from the lack of information. AbstractThis paper explores the effects of a standard influencing care choice. Firm(s) may increase the probability of offering safe products by incurring a cost. Under duopoly, they compete either in prices or in quantities. Under perfect information about safety for consumers, the selected standard that corrects a safety underinvestment is always compatible with competition. Safety overinvestment only emerges under competition in quantities and relatively low values of the cost. Under imperfect information about safety for consumers, the standard leads to a monopoly situation. However, for relatively large values of the cost, a standard cannot impede the market failure coming from the lack of information.

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Section: Information About Average Safety Effortsupporting

confidence: 58%

Section: Introductionmentioning

confidence: 99%

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Minimum safety standard, consumers’ information and competition

Marette

2007

J Regul Econ

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“…The marginal and average production costs are assumed to be invariant with respect to both quality and quantity. 6 For simplicity, we let these costs be zero. The cost of product R&D is different across firms.…”

Section: The Modelmentioning

confidence: 99%

“…The subsidy schedules induce the firm with relatively better technology to choose the higher quality product at the socially optimal level and induce the other firm to choose the lower quality product at the socially optimal level. As there are two asymmetric equilibria in the unregulated market, the R&D policy 3 One exception is Jinji and Toshimitsu (2004), who examine the effects of minimum quality standards under asymmetric duopoly with a small technology gap. Moreover, in the case of process R&D, Lahiri and Ono (1999) address the issue of optimal R&D policy in an asymmetric Cournot duopoly.…”

Section: Introductionmentioning

confidence: 99%

OPTIMAL POLICY FOR PRODUCT R&D WITH ENDOGENOUS QUALITY ORDERING: ASYMMETRIC DUOPOLY*

Jinji

Toshimitsu

2006

Aust Econ Papers

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We examine the optimal R&D subsidy/tax policy under a vertically differentiated duopoly. In a significant departure from the existing work, we consider the case of asymmetric costs of product R&D where there is a small technology gap between firms. In our analysis, the endogeneity of quality ordering is explicitly taken into account. We show that the optimal policy is described by a firmspecific subsidy schedule that is contingent on firms' quality choices. The subsidy schedule not only corrects the distortion in product quality but also selects the socially preferred equilibrium. Both Bertrand and Cournot cases are analyzed.

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Effectiveness of quality standards regulation considering the behavior of government and firms

Song

Han

2017

Manage Decis Econ

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We construct an analysis framework consisting of the central government, a local government, a representative firm, and consumers. This study analyzes how the local government's enforcement, the firm's compliance, and their interaction influence the effectiveness of regulation after the central government has established policies regarding quality standards. We construct three scenarios: perfect enforcement, imperfect enforcement, and collusion. We show that when the local government imperfectly enforces the regulation, the firm's utility and the local government's utility are higher, whereas the degree of the firm's compliance, consumers' utility, and the level of social welfare are lower. When there is collusion between the local government and the firm, the firm's utility and the local government's utility are the highest, but the degree of the firm's compliance, consumers' utility, and the level of social welfare are the lowest among the different scenarios. This study proves that the behavior of governments and firms plays a vital role in the effectiveness of quality standards regulation.

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Minimum Quality Standards under Asymmetric Duopoly with Endogenous Quality Ordering: A Note

Cited by 19 publications

References 9 publications

Minimum safety standard, consumers’ information and competition

Minimum safety standard, consumers’ information and competition

OPTIMAL POLICY FOR PRODUCT R&D WITH ENDOGENOUS QUALITY ORDERING: ASYMMETRIC DUOPOLY*

Effectiveness of quality standards regulation considering the behavior of government and firms

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