On the Regulation of a Vertically Differentiated Market

Lambertini, Luca ; Mosca, Manuela (1998) On the Regulation of a Vertically Differentiated Market. DOI 10.6092/unibo/amsacta/781.
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Abstract

The aim of this paper is to investigate a vertically differentiated market served either by a multiproduct monopolist or by duopolists, in which a public authority aiming at increasing the welfare level can choose among two instruments, namely, quality taxation/subsidization, and minimum quality standard. In the monopoly case they are equivalent as to the social welfare level, in that both allow the regulator to achieve the second best level of social welfare he would attain if he were to set qualities under the monopoly pricing rule, while they are not equivalent in terms of the distribution of surplus. In the duopoly regime, we show that there exists a taxation/subsidization scheme inducing firms to produce the socially optimal qualites.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Lambertini, Luca
Mosca, Manuela
Keywords
vertical product differentiation taxation/subsidization minimum quality standard
Subjects
DOI
Deposit date
17 Jun 2004
Last modified
17 Feb 2016 14:04
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