The Minimum Safety Standard, Consumers' Information, and Competition

Thumbnail Image
Date
2007-02-01
Authors
Marette, Stéphan
Major Professor
Advisor
Committee Member
Journal Title
Journal ISSN
Volume Title
Publisher
Abstract

This paper explores the effects of a standard influencing care choice. Firm(s) may increase the probability of offering safe products by incurring a cost. Under duopoly, they compete either in prices or in quantities. Under perfect information about safety for consumers, the selected standard that corrects a safety underinvestment is always compatible with competition. Safety overinvestment only emerges under competition in quantities and relatively low values of the cost. Under imperfect information about safety for consumers, the standard leads to a monopoly situation. However, for relatively large values of the cost, a standard cannot impede the market failure coming from the lack of information.

Series Number
Journal Issue
Is Version Of
Versions
Series
Academic or Administrative Unit
Type
article
Comments
Rights Statement
Copyright
Funding
DOI
Supplemental Resources
Source
Collections