IDEAS home Printed from https://ideas.repec.org/a/kap/atlecj/v30y2002i4p389-402.html
   My bibliography  Save this article

Jurisdictional competition for quality standards: Competition of laxity?

Author

Listed:
  • Thomas Apolte

Abstract

Regulatory competition arises where governments mutually accept quality standards in a common market. It has been claimed that regulatory competition will be subject to market failure and lead to competition of laxity in a sense that only the lowest possible quality standards survive regulatory competition. In this paper, it is shown that these results do not need to follow. First, if not a large number of small jurisdictions but a small number of large jurisdictions compete for quality standards, then the resulting quality standards will end up above the minimum level, albeit still below an efficient level. If no subsidies are allowed in order to compensate for losses by producers working under strict quality standards, quality standards will generally converge to the level of the jurisdiction with the lowest quality preferences, but not below this level. A second argument against a competition of laxity result is that quality standards of governments may be better judged by consumers than product qualities by producers. As far as this is the case, regulatory competition may even be superior to a harmonized quality standard. Copyright International Atlantic Economic Society 2002

Suggested Citation

  • Thomas Apolte, 2002. "Jurisdictional competition for quality standards: Competition of laxity?," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 30(4), pages 389-402, December.
    • Handle: RePEc:kap:atlecj:v:30:y:2002:i:4:p:389-402
    DOI: 10.1007/BF02298782
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/BF02298782
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/BF02298782?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Mark Addleson, 1994. "Competition," Chapters, in: Peter J. Boettke (ed.), The Elgar Companion to Austrian Economics, chapter 14, Edward Elgar Publishing.
    2. Sinn, Hans-Werner, 1997. "The selection principle and market failure in systems competition," Journal of Public Economics, Elsevier, vol. 66(2), pages 247-274, November.
    3. Jeanne‐Mey Sun & Jacques Pelkmans, 1995. "Regulatory Competition in the Single Market," Journal of Common Market Studies, Wiley Blackwell, vol. 33(1), pages 67-89, March.
    4. Steven B. Caudill & Randall G. Holcombe, 1999. "Specification Search and Levels of Significance in Econometric Models," Eastern Economic Journal, Eastern Economic Association, vol. 25(3), pages 289-300, Summer.
    5. Fremling, Gertrud M & Lott, John R, Jr, 1996. "The Bias towards Zero in Aggregate Perceptions: An Explanation Based on Rationally Calculating Individuals," Economic Inquiry, Western Economic Association International, vol. 34(2), pages 276-295, April.
    6. Kreps, David M. & Wilson, Robert, 1982. "Reputation and imperfect information," Journal of Economic Theory, Elsevier, vol. 27(2), pages 253-279, August.
    7. Nelson, Phillip, 1970. "Information and Consumer Behavior," Journal of Political Economy, University of Chicago Press, vol. 78(2), pages 311-329, March-Apr.
    8. Siebert, Horst & Koop, Michael J, 1993. "Institutional Competition versus Centralization: Quo Vadis Europe?," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 9(1), pages 15-30, Spring.
    9. Kihlstrom, Richard E & Riordan, Michael H, 1984. "Advertising as a Signal," Journal of Political Economy, University of Chicago Press, vol. 92(3), pages 427-450, June.
    10. Darby, Michael R & Karni, Edi, 1973. "Free Competition and the Optimal Amount of Fraud," Journal of Law and Economics, University of Chicago Press, vol. 16(1), pages 67-88, April.
    11. Franklin Allen, 1984. "Reputation and Product Quality," RAND Journal of Economics, The RAND Corporation, vol. 15(3), pages 311-327, Autumn.
    12. Asher Wolinsky, 1983. "Prices as Signals of Product Quality," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 50(4), pages 647-658.
    13. Carl Shapiro, 1983. "Premiums for High Quality Products as Returns to Reputations," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(4), pages 659-679.
    14. Michael Spence, 1976. "Symposium: The Economics of Information: Informational Aspects of Market Structure: An Introduction," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 90(4), pages 591-597.
    15. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
    16. Andreas Knorr, 1997. "Do “blacklists” enhance aviation safety?," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 32(1), pages 14-22, January.
    17. Charles Wilson, 1980. "The Nature of Equilibrium in Markets with Adverse Selection," Bell Journal of Economics, The RAND Corporation, vol. 11(1), pages 108-130, Spring.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Katharina Holzinger & Thomas Sommerer, 2011. "‘Race to the Bottom’ or ‘Race to Brussels’? Environmental Competition in Europe," Journal of Common Market Studies, Wiley Blackwell, vol. 49(2), pages 315-339, March.
    2. Batten, Jonathan A. & Bilgin, Mehmet Huseyin & Demir, Ender & Gozgor, Giray, 2023. "Does globalization affect credit market controls?," International Review of Economics & Finance, Elsevier, vol. 85(C), pages 21-43.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chen, Yong & Mak, Barry & Li, Zhou, 2013. "Quality deterioration in package tours: The interplay of asymmetric information and reputation," Tourism Management, Elsevier, vol. 38(C), pages 43-54.
    2. Chad M. Baum, 2013. "Mass-Produced Food: the Rise and Fall of the Promise of Health and Safety," Papers on Economics and Evolution 2013-03, Philipps University Marburg, Department of Geography.
    3. Eric Schmidbauer, 2016. "New and Improved?," Working Papers 2016-02, University of Central Florida, Department of Economics.
    4. Pierre Fleckinger, 2007. "Collective Reputation and Market Structure: Regulating the Quality vs Quantity Trade-of," Working Papers hal-00243080, HAL.
    5. Schmidbauer, Eric & Lubensky, Dmitry, 2018. "New and improved?," International Journal of Industrial Organization, Elsevier, vol. 56(C), pages 26-48.
    6. Ralston, Roy W., 2003. "The effects of customer service, branding, and price on the perceived value of local telephone service," Journal of Business Research, Elsevier, vol. 56(3), pages 201-213, March.
    7. Bartke, Stephan, 2015. "The economic role of valuers in real property markets," UFZ Discussion Papers 13/2015, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).
    8. Karsten Mause, 2010. "Considering Market-Based Instruments for Consumer Protection in Higher Education," Journal of Consumer Policy, Springer, vol. 33(1), pages 29-53, March.
    9. Carlyle Farrell & Gervan Fearon, 2005. "Renting Goodwill in International Marketing Channels: An Analysis of Pricing Strategies and Bargaining Power," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 33(3), pages 285-296, September.
    10. Giovanni Anania & Rosanna Nisticò, 2004. "Public Regulation as a Substitute for Trust in Quality Food Markets: What if the Trust Substitute cannot be Fully Trusted?," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 160(4), pages 681-701, December.
    11. Kwamena K. Quagrainie & Jill J. McCluskey & Maria L. Loureiro, 2003. "A Latent Structure Approach to Measuring Reputation," Southern Economic Journal, John Wiley & Sons, vol. 69(4), pages 966-977, April.
    12. Grund Christian & Gürtler Oliver, 2008. "The Effect of Reputation on Selling Prices in Auctions," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 228(4), pages 345-356, August.
    13. Gabriele Jahn & Matthias Schramm & Achim Spiller, 2005. "The Reliability of Certification: Quality Labels as a Consumer Policy Tool," Journal of Consumer Policy, Springer, vol. 28(1), pages 53-73, December.
    14. Moraga-Gonzalez, Jose Luis, 2000. "Quality uncertainty and informative advertising," International Journal of Industrial Organization, Elsevier, vol. 18(4), pages 615-640, May.
    15. McCluskey, Jill J., 2000. "A Game Theoretic Approach to Organic Foods: An Analysis of Asymmetric Information and Policy," Agricultural and Resource Economics Review, Cambridge University Press, vol. 29(1), pages 1-9, April.
    16. Choi, Yukyeong & Kim, Jeong-Yoo, 2024. "A signaling theory of reservation cancellation policies," Economic Modelling, Elsevier, vol. 130(C).
    17. Julie A. Caswell & Eliza M. Mojduszka, 1996. "Using Informational Labeling to Influence the Market for Quality in Food Products," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(5), pages 1248-1253.
    18. Lupton, Sylvie, 2006. "Il était une fois la qualité," MPRA Paper 5, University Library of Munich, Germany.
    19. Stéphan Marette & John Crespi, 2003. "Can Quality Certification Lead to Stable Cartels?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 23(1), pages 43-64, August.
    20. Arfini, Filippo, 1999. "The value of typical products : the case of Prosciutto di Parma and Parmigiano Reggiano cheese," 67th Seminar, October 28-30, 1999, LeMans, France 241032, European Association of Agricultural Economists.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:atlecj:v:30:y:2002:i:4:p:389-402. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.