Giulio Ecchia

Minimum Quality Standards and Collusion

We model the introduction of a minimum quality standard in a vertically differentiated duopoly. We extend the literature in determining the standard endogenously, showing that the maximisation of social welfare entails an increase in the surplus accruing to consumers served by the low quality firm and a decrease in the surplus of the remaining consumers. Then, we consider the effects of the standard on the stability of price collusion, proving that the standard makes it more difficult for firms to collude if consumers are sufficiently rich.

Coalition Formation in International Environmental Agreements and the Role of Institutions

The aim of this paper is to discuss the role played by international institutions in achieving effective International Environmental Agreements. We emphasise the strategic nature of environmental negotiations and use a game theoretic model of coalitional bargaining to illustrate the main issues. We argue that international institutions can intervene in the framing of the strategic interactions between countries (i.e. setting the rules of the negotiation game) and can influence the actual agreement reached when different outcomes of the negotiation game can be equilibria.

Minimum Quality Standards in Hedonic Markets with Environmental Externalities

We investigate the introduction of a minimum quality standard (MQS) in a vertically differentiated duopoly with an environmental externality. We establish that the MQS bites only if the hedonic component of consumer preferences is sufficiently strong. Then, we illustrate an underlying trade-off between the beneficial effects of quality enhancement on prices and the associated undesirable increase in the environmental externality.