Minimum Quality Standards on Oligopolistic Markets

The present book deals with vertical product differentiation and minimum quality standards on oligopolistic markets. Two products are said to be vertically differentiated if at equal prices all consumers agree about the product ranking and prefer the same product. This kind of product differentiation is also referred to as quality competition. An important tool of regulation in the context of vertical product differentiation is a so-called minimum quality standard. If a regulation authority introduces a minimum quality standard in a market or industry, no firm is allowed to produce or offer products of lower quality than the requested minimum quality. Today we observe minimum quality standards in many markets and industries. Reasons to adopt a minimum quality standard are various; for environmental concerns, safety reasons, informational asymmetries or externalities, to name just a few.

This book is a contribution to the analysis of minimum quality standards on oligopolistic markets. It extends the existing literature in three ways. The dynamic effects of a minimum quality standard under the assumption of Cournot competition are analyzed, the effects of a minimum quality standard in vertically related markets are considered, and the effects of a minimum quality standard under two-dimensional vertical product differentiation are investigated.