On Reputational Rents as an Incentive Mechanism in Competitive Markets
AbstractThis paper shows that more intense competition may improve, rather than hamper, the chances that a market for an experience good or service overcomes the problems caused by informational asymmetries. This, in spite of the fact that intensified competition diminishes the reputational rents that -allegedly- provide the incentives for the production of high quality. Our results show that instead, these incentives are created by price differentials not levels.
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Bibliographic InfoPaper provided by Instituto de Economia. Pontificia Universidad Católica de Chile. in its series Documentos de Trabajo with number 354.
Date of creation: 2009
Date of revision:
Reputation; rents; competition; adverse selection; experience good; public monitoring;
Other versions of this item:
- Bernardita Vial & Felipe Zurita, 2009. "On Reputational Rents as an Incentive Mechanism in Competitive Markets," Levine's Working Paper Archive 814577000000000279, David K. Levine.
- L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- D41 - Microeconomics - - Market Structure and Pricing - - - Perfect Competition
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-07-17 (All new papers)
- NEP-COM-2009-07-17 (Industrial Competition)
- NEP-CTA-2009-07-17 (Contract Theory & Applications)
- NEP-MIC-2009-07-17 (Microeconomics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bar-Isaac, Heski & Tadelis, Steven, 2008. "Seller Reputation," Foundations and Trends(R) in Microeconomics, now publishers, vol. 4(4), pages 273-351, August.
- Douglas W. Diamond, 1998.
"Reputation Acquisition in Debt Markets,"
Levine's Working Paper Archive
602, David K. Levine.
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