The B.E. Journal of Economic Analysis & Policy
Editor-in-Chief: Ludwig, Sandra / Schmitz, Hendrik
Ed. by Auriol, Emmanuelle / Brunner, Johann / Fleck, Robert / Mastrobuoni, Giovanni / Mendola, Mariapia / Requate, Till / de Vries, Frans / Wenzel, Tobias / Zulehner, Christine
4 Issues per year
IMPACT FACTOR 2017: 0.306
5-year IMPACT FACTOR: 0.492
CiteScore 2017: 0.50
SCImago Journal Rank (SJR) 2017: 0.414
Source Normalized Impact per Paper (SNIP) 2017: 0.531
Does a Minimum Quality Standard Always Reduce the Price of High Quality Products?
This paper investigates the standard finding that instituting a minimum quality standard within a vertically differentiated market unambiguously benefits consumers of high quality products. A competitive model is specified in which random cost shocks lead some firms to cheat in equilibrium on their reputation for high quality. When cheating occurs, instituting or raising the level of a minimum standard can lead to the price of high quality products either increasing or decreasing. The effect of a minimum quality standard on the price of high quality products becomes an empirical rather than a theoretical issue.
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