REGULATING A CONSUMER GOOD MARKET IN THE PRESENCE OF AN ENDOGENOUS BLACK MARKET ALTERNATIVE
Autor(a) principal: | |
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Data de Publicação: | 2017 |
Outros Autores: | |
Tipo de documento: | Artigo |
Idioma: | eng |
Título da fonte: | Economic Analysis of law Review |
Texto Completo: | https://portalrevistas.ucb.br/index.php/EALR/article/view/7899 |
Resumo: | This paper studies the regulation of markets where legal products compete against illegal substitutes, such as weapons, cigarettes, transplantation organs, and shadow banking. Our focus is on the impacts of regulatory measures affecting asymmetrically the legal and the illegal segments of the market on competition patterns, market outcomes and welfare. We present a game-theoretical model to endogenize companies’ decision between going legal or illegal. Such decision is associated with different costs, but also with a different type of competition in the market place: horizontal product differentiation if all firms are legal and tightly regulated, or vertical differentiation if not. Regulation may backfire if the black market is not considered. More stringent regulation – which only impacts the legal segment – fosters the incentives for going illegal whenever the new regulatory measure increases the costs of legal entry. Regulation in such a context leads to lower average product quality and consumer welfare. |
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Economic Analysis of law Review |
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REGULATING A CONSUMER GOOD MARKET IN THE PRESENCE OF AN ENDOGENOUS BLACK MARKET ALTERNATIVEBlack Markets Regulation Sin goodsThis paper studies the regulation of markets where legal products compete against illegal substitutes, such as weapons, cigarettes, transplantation organs, and shadow banking. Our focus is on the impacts of regulatory measures affecting asymmetrically the legal and the illegal segments of the market on competition patterns, market outcomes and welfare. We present a game-theoretical model to endogenize companies’ decision between going legal or illegal. Such decision is associated with different costs, but also with a different type of competition in the market place: horizontal product differentiation if all firms are legal and tightly regulated, or vertical differentiation if not. Regulation may backfire if the black market is not considered. More stringent regulation – which only impacts the legal segment – fosters the incentives for going illegal whenever the new regulatory measure increases the costs of legal entry. Regulation in such a context leads to lower average product quality and consumer welfare.Universidade Católica de Brasília2017-12-30info:eu-repo/semantics/articleinfo:eu-repo/semantics/publishedVersionAnálise TeóricaAvaliado por Pares; Peer Reviewedapplication/pdfhttps://portalrevistas.ucb.br/index.php/EALR/article/view/7899Economic Analysis of Law Review; Vol. 8 No. 2 (2017): Economic Analysis of Law Review; 251-274Economic Analysis of Law Review ; Vol. 8 Núm. 2 (2017): Economic Analysis of Law Review; 251-274Economic Analysis of Law Review; v. 8 n. 2 (2017): Economic Analysis of Law Review; 251-2742178-0587reponame:Economic Analysis of law Reviewinstname:Universidade Católica de Brasília (UCB)instacron:UCBenghttps://portalrevistas.ucb.br/index.php/EALR/article/view/7899/5421Copyright (c) 2017 Economic Analysis of Law Reviewinfo:eu-repo/semantics/openAccessHemsley, PedroPinho, Rafael2023-06-15T18:35:31Zoai:ojs.portalrevistas.ucb.br:article/7899Revistahttps://portalrevistas.ucb.br/index.php/ealrONGhttps://portalrevistas.ucb.br/index.php/EALR/oaieditor.ealr@gmail.com||sdi@ucb.br||benjaminm.tabak@gmail.com2178-05872178-0587opendoar:2023-06-15T18:35:31Economic Analysis of law Review - Universidade Católica de Brasília (UCB)false |
dc.title.none.fl_str_mv |
REGULATING A CONSUMER GOOD MARKET IN THE PRESENCE OF AN ENDOGENOUS BLACK MARKET ALTERNATIVE |
title |
REGULATING A CONSUMER GOOD MARKET IN THE PRESENCE OF AN ENDOGENOUS BLACK MARKET ALTERNATIVE |
spellingShingle |
REGULATING A CONSUMER GOOD MARKET IN THE PRESENCE OF AN ENDOGENOUS BLACK MARKET ALTERNATIVE Hemsley, Pedro Black Markets Regulation Sin goods |
title_short |
REGULATING A CONSUMER GOOD MARKET IN THE PRESENCE OF AN ENDOGENOUS BLACK MARKET ALTERNATIVE |
title_full |
REGULATING A CONSUMER GOOD MARKET IN THE PRESENCE OF AN ENDOGENOUS BLACK MARKET ALTERNATIVE |
title_fullStr |
REGULATING A CONSUMER GOOD MARKET IN THE PRESENCE OF AN ENDOGENOUS BLACK MARKET ALTERNATIVE |
title_full_unstemmed |
REGULATING A CONSUMER GOOD MARKET IN THE PRESENCE OF AN ENDOGENOUS BLACK MARKET ALTERNATIVE |
title_sort |
REGULATING A CONSUMER GOOD MARKET IN THE PRESENCE OF AN ENDOGENOUS BLACK MARKET ALTERNATIVE |
author |
Hemsley, Pedro |
author_facet |
Hemsley, Pedro Pinho, Rafael |
author_role |
author |
author2 |
Pinho, Rafael |
author2_role |
author |
dc.contributor.author.fl_str_mv |
Hemsley, Pedro Pinho, Rafael |
dc.subject.por.fl_str_mv |
Black Markets Regulation Sin goods |
topic |
Black Markets Regulation Sin goods |
description |
This paper studies the regulation of markets where legal products compete against illegal substitutes, such as weapons, cigarettes, transplantation organs, and shadow banking. Our focus is on the impacts of regulatory measures affecting asymmetrically the legal and the illegal segments of the market on competition patterns, market outcomes and welfare. We present a game-theoretical model to endogenize companies’ decision between going legal or illegal. Such decision is associated with different costs, but also with a different type of competition in the market place: horizontal product differentiation if all firms are legal and tightly regulated, or vertical differentiation if not. Regulation may backfire if the black market is not considered. More stringent regulation – which only impacts the legal segment – fosters the incentives for going illegal whenever the new regulatory measure increases the costs of legal entry. Regulation in such a context leads to lower average product quality and consumer welfare. |
publishDate |
2017 |
dc.date.none.fl_str_mv |
2017-12-30 |
dc.type.driver.fl_str_mv |
info:eu-repo/semantics/article info:eu-repo/semantics/publishedVersion Análise Teórica Avaliado por Pares; Peer Reviewed |
format |
article |
status_str |
publishedVersion |
dc.identifier.uri.fl_str_mv |
https://portalrevistas.ucb.br/index.php/EALR/article/view/7899 |
url |
https://portalrevistas.ucb.br/index.php/EALR/article/view/7899 |
dc.language.iso.fl_str_mv |
eng |
language |
eng |
dc.relation.none.fl_str_mv |
https://portalrevistas.ucb.br/index.php/EALR/article/view/7899/5421 |
dc.rights.driver.fl_str_mv |
Copyright (c) 2017 Economic Analysis of Law Review info:eu-repo/semantics/openAccess |
rights_invalid_str_mv |
Copyright (c) 2017 Economic Analysis of Law Review |
eu_rights_str_mv |
openAccess |
dc.format.none.fl_str_mv |
application/pdf |
dc.publisher.none.fl_str_mv |
Universidade Católica de Brasília |
publisher.none.fl_str_mv |
Universidade Católica de Brasília |
dc.source.none.fl_str_mv |
Economic Analysis of Law Review; Vol. 8 No. 2 (2017): Economic Analysis of Law Review; 251-274 Economic Analysis of Law Review ; Vol. 8 Núm. 2 (2017): Economic Analysis of Law Review; 251-274 Economic Analysis of Law Review; v. 8 n. 2 (2017): Economic Analysis of Law Review; 251-274 2178-0587 reponame:Economic Analysis of law Review instname:Universidade Católica de Brasília (UCB) instacron:UCB |
instname_str |
Universidade Católica de Brasília (UCB) |
instacron_str |
UCB |
institution |
UCB |
reponame_str |
Economic Analysis of law Review |
collection |
Economic Analysis of law Review |
repository.name.fl_str_mv |
Economic Analysis of law Review - Universidade Católica de Brasília (UCB) |
repository.mail.fl_str_mv |
editor.ealr@gmail.com||sdi@ucb.br||benjaminm.tabak@gmail.com |
_version_ |
1798675420588015616 |