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Incentives for Quality in Friendly and Hostile Informational Environments

Author

Listed:
  • Pierre Fleckinger

    (CERNA i3 - Centre d'économie industrielle i3 - Mines Paris - PSL (École nationale supérieure des mines de Paris) - PSL - Université Paris Sciences et Lettres - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Matthieu Glachant

    (CERNA i3 - Centre d'économie industrielle i3 - Mines Paris - PSL (École nationale supérieure des mines de Paris) - PSL - Université Paris Sciences et Lettres - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique)

  • Gabrielle Moineville

    (CERNA i3 - Centre d'économie industrielle i3 - Mines Paris - PSL (École nationale supérieure des mines de Paris) - PSL - Université Paris Sciences et Lettres - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique)

Abstract

We develop a model of costly quality provision under biased disclosure. We define as friendly an environment in which the disclosure probability increases with quality, and as hostile an environment in which the opposite holds. Hostile environments produce a positive externality among sellers and potentially multiple equilibria. In contrast, friendly environments always yield a unique equilibrium. We establish that the environment that maximizes quality generates signals contradicting buyers' expectations. Hence, hostility produces greater incentives for quality than friendliness when costs are low and monitoring resources high.

Suggested Citation

  • Pierre Fleckinger & Matthieu Glachant & Gabrielle Moineville, 2017. "Incentives for Quality in Friendly and Hostile Informational Environments," Post-Print hal-01693887, HAL.
    • Handle: RePEc:hal:journl:hal-01693887
    DOI: 10.1257/mic.20150119
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    Cited by:

    1. Patrice Cassagnard & Tendai Espinosa, 2022. "From boycott to buycott: is activism from the North good for the South?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 158(4), pages 1107-1135, November.
    2. Matthieu Glachant & Gabrielle Moineville, 2012. "The informational role of nongovernmental organizations to induce self-regulation: Cheering the leaders or booing the laggards?," Working Papers hal-00716864, HAL.
    3. Heski Bar-Isaac & Joyee Deb, 2021. "Reputation With Opportunities for Coasting," Journal of the European Economic Association, European Economic Association, vol. 19(1), pages 200-236.
    4. Pierre Fleckinger & Wanda Mimra & Angelo Zago, 2017. "The Incentive Properties of Collective Reputation," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01952992, HAL.

    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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