International Coordination of Quality Standards and Vertical Product Differentiation


Lutz, Stefan


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URL: http://ub-madoc.bib.uni-mannheim.de/163
URN: urn:nbn:de:bsz:180-madoc-1638
Document Type: Working paper
Year of publication: 2003
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: L13 F12 F13 ,
Subject headings (SWD): Qualitätsnorm , Vertikale Produktdifferenzierung
Abstract: I study the influence of minimum quality standards in a partial-equilibrium model of vertical product differentiation and trade in which duopolistic firms face quality-dependent costs and compete in quality and price in two segmented markets. Three alternative standard setting arrangements are Full Harmonization, National Treatment and Mutual Recognition. Under either alternative, standards can be found that increase welfare in both regions. The analysis integrates the choice of a particular standard setting alternative by governments into the model. Mutual Recognition emerges as one regulatory alternative that always improves welfare in both regions when compared to the case without regulation. Under certain cost conditions, both regions will prefer Mutual Recognition over all available alternatives.
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Lutz, Stefan (2003) International Coordination of Quality Standards and Vertical Product Differentiation. Open Access [Working paper]
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