We examine minimum quality standards (MQS) regulation in vertically differentiated markets with free entry.

Using a model where a monopoly chooses its commodity's quality as well as its quantity, we consider optimal regulation whenthe monopoly's costs are unknown to the regulator. Regarding quantity and quality, the results are a natural extension of Baron and Myerson (1982): the levels of quantity...

Using a model where a monopoly chooses its commodity's quality as well as its quantity, we consider optimal regulation whenthe monopoly's costs are unknown to the regulator. Regarding quantity and quality, the results are a natural extension of Baron and Myerson (1982): the levels of quantity...

This paper shows that a regulator should be careful when regulating a final product which industry is characterized by an unregulated essential facility sold through non-linear tariffs. Two regulatory environments are considered: the Laffont-Tirole framework with exogenous public funds and the...

In this paper we investigate why regulators may wish to open regulated markets to entry by unregulated firms. We adopt Posner's view of regulation as a taxation scheme, whereby regulators set high rates in some markets in order to subsidize other markets.

We show that the simple fact that a monopolist sells a good in units whichare indivisible may we induce him to select a quality for his product which is not the highest one, even if no cost of any sort is attached to quality improvement.