Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/23976
Authors: 
Lutz, Stefan
Year of Publication: 
2003
Series/Report no.: 
ZEW Discussion Papers 03-41
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.
Subjects: 
product differentiation
oligopoly
trade
quality standards
policy coordination
JEL: 
F12
F13
L13
Document Type: 
Working Paper

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