Standards vs. labels with imperfect competition and asymmetric information

I demonstrate that providing information about product quality is not necessarily the best way to address asymmetric information problems when markets are imperfectly competitive. In a vertical differentiation model I show that a Minimum Quality Standard, which retains asymmetric information, generates more welfare than a label, which provides full information.

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Year of publication:	2012
Authors:	Baltzer, Kenneth
Published in:	Economics Letters. - Elsevier, ISSN 0165-1765. - Vol. 114.2012, 1, p. 61-63
Publisher:	Elsevier
Subject:	Minimum quality standard \| Label \| Asymmetric information \| Vertical differentiation \| Product quality

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Type of publication:	Article
Classification:	L13 - Oligopoly and Other Imperfect Markets ; L15 - Information and Product Quality; Standardization and Compatibility ; L51 - Economics of Regulation
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010597210