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Public Report, Price, and Quality

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  • Ching‐to Albert Ma
  • Henry Y. Mak

Abstract

A monopolist produces a good with two qualities. All consumers have the same valuation of the first quality, but their valuations of the second vary, and are their private information. A public agency can verify qualities, and make credible reports to consumers. In Full Quality Report, the public agency reports both qualities. In Average Quality Report, it reports a weighted average of qualities. The equilibrium prices and qualities in Full Quality Report can be implemented by Average Quality Report. Equilibrium prices and qualities in Average Quality Report give higher consumer surplus than Full Quality Report. Bertrand competition under Average Quality Report yields first‐best prices and qualities.

Suggested Citation

  • Ching‐to Albert Ma & Henry Y. Mak, 2014. "Public Report, Price, and Quality," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 23(2), pages 443-464, June.
    • Handle: RePEc:bla:jemstr:v:23:y:2014:i:2:p:443-464
    DOI: 10.1111/jems.12050
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    Cited by:

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    3. Levent Celik & Mikhail Drugov, 2021. "Score Disclosure," Working Papers w0285, New Economic School (NES).
    4. Gu, Yiquan & Rasch, Alexander & Wenzel, Tobias, 2022. "Consumer salience and quality provision in (un)regulated public service markets," Regional Science and Urban Economics, Elsevier, vol. 93(C).
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    6. Markus Larsson & Rebecka Milestad & Thomas Hahn & Jacob Von Oelreich, 2016. "The Resilience of a Sustainability Entrepreneur in the Swedish Food System," Sustainability, MDPI, vol. 8(6), pages 1-18, June.
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    8. Chen, Yijuan & Sivey, Peter, 2021. "Hospital report cards: Quality competition and patient selection," Journal of Health Economics, Elsevier, vol. 78(C).
    9. Yijuan Chen & Juergen Meinecke & Peter Sivey, 2016. "A Theory of Waiting Time Reporting and Quality Signaling," Health Economics, John Wiley & Sons, Ltd., vol. 25(11), pages 1355-1371, November.
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    11. Katharina Huesmann & Wanda Mimra, 2015. "Quality provision and reporting when health care services are multi-dimensional and quality signals imperfect," CER-ETH Economics working paper series 15/221, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.

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