Mutual recognition versus national treatment of standards in a classical monopoly or oligopoly
journal contributionposted on 21.05.2014 by Huw Edwards
Any type of content formally published in an academic journal, usually following a peer-review process.
We examine strategic biases in the international regulation of monopolistic or oligopolistic industries, where a minimum vertical quality standard is imposed on a classical monopoly or duopoly, to correct an undersupply of quality. This differs from Hotelling-based studies, where the aim of minimum quality standards is to correct excessive product differentiation. It also allows examination of unbalanced trade, not considered in previous work. Noncooperative regulators tend to overregulate for profit-shifting reasons, though only when producers can vary standards across countries. However, even in this latter case, mutual recognition is only unambiguously welfare-improving when trade is balanced, and it reduces trade flows when quality is taken into account.
- Business and Economics