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Quality certification standards in competitive markets: When consumers and producers (dis)agree

By Harvey Lapan and GianCarlo Moschini

Abstract

A quality certification standard in a competitive setting can improve welfare but may affect consumers and producers differently. In a competitive model with quality preferences of the vertical product differentiation type, we find that producers prefer a higher (lower) quality standard than consumers if individual demand functions are log-convex (log-concave).Comparative statics Log-concavity Minimum quality standards Quality certification Vertical product differentiation

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