Impacts of minimum quality standards in durable-goods markets

This study explores the welfare implications of minimum quality standards (MQS) in durable goods markets, contrasting them with the primary focus of existing research on nondurable-goods markets. Our findings show that MQS can improve social welfare in durable-goods markets by encouraging higher research and development levels and increasing overall market outputs. Our findings also suggest that deploying MQS strategically reduces quality disparities across firms, fostering more competition and benefiting consumers. Discussions on imperfect durability rates and the impact of horizontal product differentiation are also included.