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Quality certification standards in competitive markets: When consumers and producers (dis)agree

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  • Lapan, Harvey
  • Moschini, GianCarlo

Abstract

A quality certification standard in a competitive setting can improve welfare but may affect consumers and producers differently. In a competitive model with quality preferences of the vertical product differentiation type, we find that producers prefer a higher (lower) quality standard than consumers if individual demand functions are log-convex (log-concave).

Suggested Citation

  • Lapan, Harvey & Moschini, GianCarlo, 2009. "Quality certification standards in competitive markets: When consumers and producers (dis)agree," Economics Letters, Elsevier, vol. 104(3), pages 144-147, September.
    • Handle: RePEc:eee:ecolet:v:104:y:2009:i:3:p:144-147
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    References listed on IDEAS

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    6. Harvey Lapan & GianCarlo Moschini, 2007. "Grading, Minimum Quality Standards, and the Labeling of Genetically Modified Products," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(3), pages 769-783.
    7. Uri Ronnen, 1991. "Minimum Quality Standards, Fixed Costs, and Competition," RAND Journal of Economics, The RAND Corporation, vol. 22(4), pages 490-504, Winter.
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    Cited by:

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    More about this item

    Keywords

    Comparative statics Log-concavity Minimum quality standards Quality certification Vertical product differentiation;

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General

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