Credence goods monopolists
With a credence good, consumers are never sure about the extent of the good that they actually need. Experts such as doctors and lawyers, as well as auto mechanics and appliance service-persons (the sellers) not only provide the services, but also act as the expert in determining the customer's requirements. This information asymmetry between buyers and the seller creates strong incentives for the seller to cheat. We analyze whether the market mechanism may induce non-fraudulent seller behavior.
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- Wolfgang Pesendorfer & Asher Wolinsky, 1998.
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1229, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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959, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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- Darby, Michael R & Karni, Edi, 1973. "Free Competition and the Optimal Amount of Fraud," Journal of Law and Economics, University of Chicago Press, vol. 16(1), pages 67-88, April.
- Fridolin E. Marty, 1998. "Capacity as a Determinant of the Supply for Physicians' Services," Diskussionsschriften dp9805, Universitaet Bern, Departement Volkswirtschaft.
- Taylor, Curtis R, 1995. "The Economics of Breakdowns, Checkups, and Cures," Journal of Political Economy, University of Chicago Press, vol. 103(1), pages 53-74, February.
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