Collective Reputation, Entry and Minimum Quality Standard
Raphaël Soubeyran, Elodie Rouvière
Collective Reputation,Entry,Minimum Quality Standard
Economy and Society
This article deals with the issue of entry into an industry where firms share a collective reputation. First, we show that free entry is not socially optimal; there is a need for regulation through the imposition of a minimum quality standard. Second, we argue that a minimum quality standard can induce firms to enter the market. Contrary to conventional wisdom, a minimum quality standard should not always be considered as a barrier to entry.