Normative market regulation by means of early standardization: A descriptive policy analysis for the biobased industry

摘要

This paper presents results from an analysis on the economic impact of early standardization for biobased materials with potential to internalize the costs of environmental damage from crude oil consumption. The results of the quality game in a vertically differentiated model show that incumbents will always improve the environmental quality of their products to increase profits. New entrants will in any case benefit from this, but their own incentive to improve quality remains low. To ensure that both players improve environmental quality, the standard should not be too strict in the event of early release. This will enhance the average environmental quality of products in the market and increase demand, possibly with a positive impact on social welfare. Then early standardization will be beneficial for both the biobased industry and society. (C) 2019 Elsevier Ltd. All rights reserved.