Reciprocity, social ties, and competition in markets for experience goods
Abstract
Reciprocal customers may disproportionately improve the performance of markets for experience goods. Reciprocal customers reward (punish) firms for providing good (bad) quality by upholding (terminating) the customer relation. This may induce firms to provide good quality which, in turn, may induce a positive externality for nonreciprocal customers who would, in the absence of reciprocal types, face market breakdown. This efficiency-enhancing effect of reciprocity is boosted when there are social ties between consumers and competition between firms. The existence of social ties or competition alone does not improve market performance.(This abstract was borrowed from another version of this item.)
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Bibliographic Info
Article provided by Elsevier in its journal The Journal of Socio-Economics.
Volume (Year): 36 (2007)
Issue (Month): 2 (April)
Pages: 191-203
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/620175
Related research
Keywords:Other versions of this item:
- Steffen Huck & Jean-Robert Tyran, 2004. "Reciprocity, Social Ties, and Competition in Markets for Experience Goods," Discussion Papers 04-12, University of Copenhagen. Department of Economics.
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
- Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Social and Economic Stratification
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- Florian Baumann & Tim Friehe & Kristoffel Grechenig, 2010. "Switching Consumers and Product Liability: On the Optimality of Incomplete Strict Liability," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2010_03, Max Planck Institute for Research on Collective Goods.
- Baumann, Florian & Friehe, Tim & Grechenig, Kristoffel, 2011. "A note on the optimality of (even more) incomplete strict liability," International Review of Law and Economics, Elsevier, vol. 31(2), pages 77-82, June.
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