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How Consumer Information Curtails Market Power in the Funeral Industry


  • Thierry BLAYAC
  • Patrice BOUGETTE
  • Christian MONTET


The purpose of this article is to show, based on the case of the French market, that consumer perception of different funeral service offers, along with new entry in a special storing facility service (“chambre funéraire”), can be sufficient to impose competitive pressures on the various suppliers, including the former monopolist. With a discrete choice experiment implemented in Lyon, France, we find evidence that, contrary to widely shared beliefs about this specific market, demand for funeral services seems characterized by relatively high price elasticities, at least as soon as consumers are fully informed about the opportunities open to them in this market. Consumer behavior has actually changed in favor of a better assessment of the different possibilities of services supplied and of their relative price. We then implement simulations in local markets and show that, with good consumer information, the market power of the supposedly dominant firm is much less important than it is generally believed. Furthermore, simulations stress the procompetitive effects of setting up a new storing facility by any businesses. We finally show that, if some improvements can still be brought to the functioning of this market, they should come from a better regulation of consumer information and of the entry of firms.

Suggested Citation

  • Thierry BLAYAC & Patrice BOUGETTE & Christian MONTET, 2012. "How Consumer Information Curtails Market Power in the Funeral Industry," Working Papers 12-12, LAMETA, Universtiy of Montpellier, revised Apr 2012.
  • Handle: RePEc:lam:wpaper:12-12

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    References listed on IDEAS

    1. Motta,Massimo, 2004. "Competition Policy," Cambridge Books, Cambridge University Press, number 9780521016919, March.
    2. Lori Parcel, 2008. "Stiff Competition: Vertical Relationships in Cremation Services," Discussion Papers 07-041, Stanford Institute for Economic Policy Research.
    3. Harrington, David E & Krynski, Kathy J, 2002. "The Effect of State Funeral Regulations on Cremations Rates: Testing for Demand Inducement in Funeral Markets," Journal of Law and Economics, University of Chicago Press, vol. 45(1), pages 199-225, April.
    4. Louviere,Jordan J. & Hensher,David A. & Swait,Joffre D. With contributions by-Name:Adamowicz,Wiktor, 2000. "Stated Choice Methods," Cambridge Books, Cambridge University Press, number 9780521788304, March.
    5. Brownstone, David & Train, Kenneth, 1998. "Forecasting new product penetration with flexible substitution patterns," Journal of Econometrics, Elsevier, vol. 89(1-2), pages 109-129, November.
    6. David E. Harrington, 2007. "Markets: Preserving Funeral Markets with Ready-to-Embalm Laws," Journal of Economic Perspectives, American Economic Association, vol. 21(4), pages 201-216, Fall.
    7. Javier Elizalde, 2012. "A theoretical approach to market definition analysis," European Journal of Law and Economics, Springer, vol. 34(3), pages 449-475, December.
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    Cited by:

    1. Blayac, Thierry & Bougette, Patrice, 2017. "Should I go by bus? The liberalization of the long-distance bus industry in France," Transport Policy, Elsevier, vol. 56(C), pages 50-62.

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    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation

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