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| stephan marette |
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| ''Standards and Labels'' |
| ( 2008, Vol. 12 No.2 ) |
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| This paper explores the effects of a standard and/or a label influencing care choice. An effort by the firm may increase the probability of offering safe/high-quality products and a label may also be chosen to provide additional information to consumers. It is shown that, except for a few cases, a safety standard maximizing welfare corrects the safety underinvestment by the firm. The safety standard also changes the label choice compared to the private choice that would be made without any regulation. In particular, the enforcement of a safety standard may lead to the absence of a label or to the emergence of a voluntary/mandatory label. |
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| Keywords: information |
JEL: L5 - Regulation and Industrial Policy: General
L1 - Market Structure, Firm Strategy, and Market Performance: General |
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| Manuscript Received : Jan 17 2008 | | Manuscript Accepted : Jan 18 2008 |
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