Minimum Quality Standards and Predatory Behaviour
Date
01.01.1999
01.01.1999
Authors
Luca Lambertini, Carlo Scarpa
JEL Code
L12,L13
L12,L13
Keywords:
MQS,vertical differentiation,predatory behaviour
MQS,vertical differentiation,predatory behaviour
Publisher
Economy and Society
Economy and Society
Editor
Fausto Panunzi
Fausto Panunzi
This paper shows that the introduction of a minimum quality standard can have repercussions on market structure, opening the possibility of predatory behaviour. The predatory equilibrium exists independently of whether or not adjustment costs are present. Moreover, whenever predation is an equilibrium, it is selected by the risk dominance criterion.