Intermediaries as Quality Assessors in Markets with Asymmetric
Abstract. Intermediaries often arise in order to facilitate trade in markets characterized by asymmetric information. In this paper we study the intermediary role of tour operators in the market for package tourism. Policymakers have tried to address information asymmetries in this market by providing hotel ratings. We show that those ratings are not accurate indicators of quality and that tour operators play a vital role by pooling together information about different holiday destinations and providing their own ratings of accommodations. We also find that significant price variation exists across countries, and that some countries systematically under- or over-rate their hotels.
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Bibliographic InfoPaper provided by University of Cyprus Department of Economics in its series University of Cyprus Working Papers in Economics with number 3-2004.
Length: 26 pages
Date of creation: Feb 2004
Date of revision:
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Web page: http://www.econ.ucy.ac.cy
intermediaries; middlemen; asymmetric information; tourism industry.;
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