Incidence of strict quality standards: Protection of consumers or windfall for professionals?

Daiji Kawaguchi, Tetsushi Murao, Ryo Kambayashi

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

This paper examines the effects of upgrading product quality standards on product and professional labor market equilibriums when both markets are regulated. The Japanese government revised the Building Standards Act in June 2007, requiring a stricter review process for approving the plans of large-scale buildings. This regulatory change increased the wages of certified architects in Tokyo by 30 percent but did not increase their total hours worked because of an inelastic labor supply. The stricter quality standards created a quasi rent for certified architects and owners of condominiums at a cost to consumers. Evidence suggests that the new standards increased the transaction price of existing condominiums by 15 percent in the Tokyo metropolitan area.

Original languageEnglish
Pages (from-to)195-224
Number of pages30
JournalJournal of Law and Economics
Volume57
Issue number1
DOIs
Publication statusPublished - Jan 1 2014

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics
  • Law

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