Income Distribution, Government Regulation,and Product Quality

The paper analysed people's product quality selection, inferior product appearance and resolution, etc. mainly from the perspective of income distribution and government supervision.When consumes, people not only to select the quantity of consumption product, but also to select the quality of product. Generally, the price of high-quality product is higher and the price of low-quality product is lower. The demands of different consumer groups to product quality are different, someone prefers high-quality products and someone prefers low-quality products, the most important reason to the preference difference is different payment willingness of them to product quality, which is decided by different income level. Obviously, the manufacturers of pursuing profit maximization have to take into account people's demands for product quality, on the one hand, provide different quality grades of products, on the other hand, decide the output of various quality levels products, thus will form a certain product quality distribution in the case of market equilibrium.The income level and distribution have a major impact to the distribution of product quality. In the research of income distribution impacting the formation of high and low-quaity product on quantity percentage, the paper established product quality selection model under established and endogenous income distribution, and found through analysis that, the preference and payment ability of low-income people to high-quality product is lower, so the expansion of low-income people will reduce the consumption of people to high-quality product, thus increase the proportion of low-quality product. However, not in any case that the income distribution is closer to avearge, the proportion of low-quality product is smaller; if the income distribution is extremely unequal, the improvement to income distribution will instead increase the proportion of low-quality product.Furthermore, the paper threw off the research to product quantity selection, centrally analysed the impact of income distribution to product quality, and assumed that each consumer only buys one unit's product. For income distribution, assumed the income subject to positive skewness distribution, and confirmed that whether the income distribution inequality is improved under the conditions of various parameters change by Lorenz curve and the relative concentration curve. Found from the analysis that, if redistribute income and make people become poorer to achieve the improvement of income inequality, although the income inequality is improved, but the total trend of quality level is down no matter high-quality product or low-quality product. However, the situation will be different under the conditions of established income distribution way and changing the upper or lower limit of income level. For high-quality product, the quality level will be improved no matter increasing upper limit or lower limit of income level. However for low-quality product, when the inequality of established income distribution is more serious, the increase of income level upper limit can promote the improvement of quality level of low-quality product, and the increase of income level lower limit can promote the decrease of quality level of low-quality product. Conversely, if the established income distribution is more equal, the increase of income level upper limit will be almost no effect to quality level of low-quality product, but the increase of income level lower limit will significantly improve the quality level of low-quality product. Besides, when income distribution is improved to a certain degree, will cause the demand of market to low-quality product be0and low-quality product will disappear; when the lower limit of income level is improved to a certain degree, the low-quality product may disappear from the market even if the income distribution is not so equal.After taking into account to quality standard of products, the low-quality products are also divided into low-quality qualified products and inferior products. The appearance of inferior products are not completely correlated with usual information, but also correlated with low product quality payment willingness of low-income people. That is, the income level and payment willingness of low-income people are low, so this part of inferior products are real needs. As long as the consumer believes that the sum of risk cost of buying inferior product and inferior product price is still less than the price of similar high-quality product, they will continue to buy inferior product; they will stop buying until the quality of inferior product is too low, perniciousness is too large, the sum of risk cost and price of inferior product is more than the price of similar high-quality product.In view of the appearance of inferior products aren't caused by incomplete information, so our current product quality regulation model of mainly focusing on information disclosure, strike and punishment can't solve the problem of inferior product, which is one reason of causing lack of government quality supervision. Therefore, should also prepare a package of measures to solve income problems aiming at inferior product caused by income, can use the way of subsidies, such as: one-time transfer payment, subsidies and cash back to the distributors, as well as subsidies to manufacturers, etc. One-time transfer payment can't lead the propensity of consumption, so it is not appliable to the consumers of extreme poverty; the implementation of subsidies to distributors may encounter many difficulties; the better way is to carry out cash back to the consumption of low-income people to qualified products, of course, this will rely on certification and supervision of government departments to product quality; the subsidies to manufacturer is only appliable to part products, such as:subsidies to private kindergarten school bus.The paper also explored additional reasons of lack of government supervision, and thought that, quality supervision is not independent from the government. Taking into account government's own economic interests, it will give up the objectives of quality supervision when local interests conflict with quality supervision objectives, what can also cause the lack of quality supervision. In order to prove this problem, the paper established the model on a credence product market, where the quality products manufacturer and counterfeit manufacturer coexist, and assumed the government pursue fiscal revenue maximization. Found through the research that, the government supervises product quality, while not completely eliminate the existence of illegal manufacturer, instead, acquiesces part counterfeit and low-quality products into the market, what resulted in the average quality level of whole market is not optimal. This behavior greatly damaged the welfare of consumers. If want to change this situation, the most fundamental way is to add maximum social welfare in objective function of government and make it become an important goal, as a result, the resolute safeguard of government to product quality level will become a consciousness.