Pleasures of cockaigne: Quality gaps, market structure, and the amount of grading

The article explores under what circumstances high-quality producers would not voluntarily submit to grading when low-quality firms would readily do s o and under what conditions high-quality firms would have a lesser proporti on of their output graded than would their low-quality counterparts. It als o investigates how market structure affects the decison to grade, establish ing that a competitive industry carries out the optimal amount of grading. When some firms have finite market shares, the industry engages in excessiv e grading.