On Reputational Rents as an Incentive Mechanism in Competitive Markets
This 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.
(This abstract was borrowed from another version of this item.)
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- 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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