Vertical Differentiation and Credence Goods: Harmonized Labeling and Gains from International Integration

Using a model of vertical product differentiation, we show under what institutional circumstances welfare gains will be maximized as economies integrate and harmonize labeling and certification policies for credence goods. Specifically, we show that harmonized mandatory, exclusive discrete labeling will not maximize the gains from economic integration, i.e., the choice of labeling regime can have a negative effect on market structure if firms choose to exit, reducing the range and quality of goods in the integrated market.


Issue Date:
2008
Publication Type:
Conference Paper/ Presentation
PURL Identifier:
http://purl.umn.edu/6340
Total Pages:
30
JEL Codes:
F12; F21; L13
Series Statement:
Selected Paper
469920




 Record created 2017-04-01, last modified 2017-08-23

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