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Endogenous Timing and Quality Standards in a Vertically Differentiated Duopoly

Author

Listed:
  • Giulio ECCHIA

    (Faculty of Law, University of Foggia, Italie)

  • Luca LAMBERTINI

    (Department of Economics, University of Bologna, Italie)

Abstract

The consequences of the adoption of quality standards on the endogenous timing of moves are investigated in a vertically differentiated duopoly. We obtain two main results. First, we prove that, when the low-quality firm is Stackelberg leader in the quality stage, the related MQS is ineffective. Second, the timing game in the quality space has a unique equilibrium in pure strategies, involving simultaneous moves. The related optimal MQS is time consistent, although suboptimal from the viewpoint of the regulator.

Suggested Citation

  • Giulio ECCHIA & Luca LAMBERTINI, 2001. "Endogenous Timing and Quality Standards in a Vertically Differentiated Duopoly," Discussion Papers (REL - Recherches Economiques de Louvain) 2001021, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    • Handle: RePEc:ctl:louvre:2001021
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    References listed on IDEAS

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    14. Constantatos, Christos & Perrakis, Stylianos, 1998. "Minimum Quality Standards, Entry, and the Timing of the Quality Decision," Journal of Regulatory Economics, Springer, vol. 13(1), pages 47-58, January.
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    Cited by:

    1. Eric Giraud-Héraud & Lamia Rouached & Louis-Georges Soler, 2003. "Minimum Quality Standard and Premium Private Labels," Working Papers hal-00242955, HAL.
    2. Éric Giraud-Héraud & Lamia Rouached & Louis-Georges Soler, 2006. "Private labels and public quality standards: How can consumer trust be restored after the mad cow crisis?," Quantitative Marketing and Economics (QME), Springer, vol. 4(1), pages 31-55, March.
    3. Codron, Jean-Marie & Giraud-Heraud, Eric & Soler, Louis-Georges, 2005. "Minimum quality standards, premium private labels, and European meat and fresh produce retailing," Food Policy, Elsevier, vol. 30(3), pages 270-283, June.

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    More about this item

    Keywords

    Minimum Quality Standard; extended game; endogenous timing;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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