Abstract

http://ssrn.com/abstract=2228262
 


 



Quality Competition in Markets with Regulated Prices and Minimum Quality Standards


Roberto Cellini


University of Catania - Department of Economics and Business

Fabio G. Lamantia


University of Calabria - Department of Economics, Statistics and Finance

March 4, 2013


Abstract:     
We study the equilibrium and its stability property in a duopoly market in which minimum quality standards (MQS) are set, prices are regulated with links to product quality, and firms compete in quality. The adjustment dynamics are taken into account. We focus on the role that MQS play, in affecting equilibrium allocations and the system dynamic properties. In particular, we show that chaotic dynamics may emerge, precisely due to MQS; under specific circumstances, MQS are responsible for the outcome of maximal differenciation in product qualities across providers.

Number of Pages in PDF File: 31

Keywords: Oligopoly, Quality competition, Minimum quality standard

JEL Classification: C73, H42, I18, L13

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Date posted: March 4, 2013  

Suggested Citation

Cellini, Roberto and Lamantia, Fabio G., Quality Competition in Markets with Regulated Prices and Minimum Quality Standards (March 4, 2013). Available at SSRN: http://ssrn.com/abstract=2228262 or http://dx.doi.org/10.2139/ssrn.2228262

Contact Information

Roberto Cellini (Contact Author)
University of Catania - Department of Economics and Business ( email )
Corso Italia 55
95129 Catania, 95129
Italy
+390957537728 (Phone)
+390957537710 (Fax)
Fabio G. Lamantia
University of Calabria - Department of Economics, Statistics and Finance ( email )
Via P. Bucci
Rende, CS I-87036
Italy
HOME PAGE: http://fabiolamantia.altervista.org/
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