Regulating Quality: a Comparison Between Minimum Quality Standard and Mixed Oligopoly

This paper compares two possible State interventions in a market where a vertical differentiable good is produced: minimum quality standards (MQS) and mixed competition. In the analysis of MQS I consider an endogenous standard, given by the maximization of the Social Welfare,and the possibility for the firms not to respect such a standard, sellinga low quality illegal good. In the study of the mixed oligopoly I concentratethe analysis on sectors where there might be separation betweenmanagers (who set the prices maximizing the profit) and employees (whoset the quality maximizing the social welfare). The main result is that inthese sectors the presence of the public firm allows to increase the SocialWelfare with respect to the case when the good is produced by privatefirms or by a firm regulated with MQS.