Overcompliance with minimum quality standards

This paper presents an unnoticed result that may occur when an effective minimum quality standard is imposed in a duopoly model where firms decide on quality and prices in two stages and where both covered or uncovered markets may be endogenous outcomes of the competition game. We derive situations, associated to transitions induced by the standard from uncovered market to covered market, where the two firms decide to provide a quality level higher than the minimum quality required by the standard (Copyright: Fundación SEPI)