Ecchia, Giulio ; Lambertini, Luca ; Tampieri, Alessandro
(2011)
Minimum Quality Standards in Hedonic Markets with Environmental Externalities.
Bologna:
Dipartimento di Scienze economiche DSE,
p. 11.
DOI 10.6092/unibo/amsacta/4510.
In: Quaderni - Working Paper DSE
(731).
ISSN 2282-6483.
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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.
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