We investigate the introduction of a minimum quality standard (MQS) in a vertically differentiated duopoly with an environmental externality. We establish that the MQS bites only if the hedonic component of consumer preferences is sufficiently strong. Then, we illustrate an underlying tradeoff between the beneficial effects of quality enhancement on prices and the associated undesirable increase in the environmental externality.

Minimum Quality Standards in Hedonic Markets with Environmental Externalities

ECCHIA, GIULIO;LAMBERTINI, LUCA;TAMPIERI, ALESSANDRO
2013

Abstract

We investigate the introduction of a minimum quality standard (MQS) in a vertically differentiated duopoly with an environmental externality. We establish that the MQS bites only if the hedonic component of consumer preferences is sufficiently strong. Then, we illustrate an underlying tradeoff between the beneficial effects of quality enhancement on prices and the associated undesirable increase in the environmental externality.
2013
Ecchia Giulio; Lambertini Luca ; Tampieri Alessandro
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11585/395871
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