The present note shows that "innocuous" Minimum Quality Standards, namely below the lowest quality level in a market, may have effects on equilibrium outcomes. Such a MQS reduces the incentive to invest in R&D by the quality-leading firm.
"Innocuous" minimum quality standards / P.G. Garella. - In: ECONOMICS LETTERS. - ISSN 0165-1765. - 92:3(2006), pp. 368-374. [10.1016/j.econlet.2006.03.022]
"Innocuous" minimum quality standards
P.G. GarellaPrimo
2006
Abstract
The present note shows that "innocuous" Minimum Quality Standards, namely below the lowest quality level in a market, may have effects on equilibrium outcomes. Such a MQS reduces the incentive to invest in R&D by the quality-leading firm.
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