IDEAS home Printed from https://ideas.repec.org/p/mse/cesdoc/13044.html
   My bibliography  Save this paper

Investments in Quality, Collective Reputation and Information Acquisition

Author

Listed:

Abstract

In many cases consumers cannot observe firms' investment in quality or safety, but have only beliefs on the average quality of the industry. In addition, the outcome of the collective investment game of the firms may be stochastic since firms cannot control perfectly the technology or external factors that may affect production. In such situations, when only consumers' subjective perceptions of the industry level of quality matters, the regulator may make information available to firms or subsidize their information acquisition. Under what conditions is it desirable to make information available? We show how firms' overall level of investment in quality depends upon the parameters of the quality accumulation process, the cost of investment and the number of firms in the industry. We also show the potentially negative effects on the total level of quality from providing information on consumers' actual valuation

Suggested Citation

  • Fulvio Fontini & Katrin Millock & Michele Moretto, 2013. "Investments in Quality, Collective Reputation and Information Acquisition," Documents de travail du Centre d'Economie de la Sorbonne 13044, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
  • Handle: RePEc:mse:cesdoc:13044
    as

    Download full text from publisher

    File URL: ftp://mse.univ-paris1.fr/pub/mse/CES2013/13044.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Leah Platt Boustan & Matthew E. Kahn & Paul W. Rhode, 2012. "Moving to Higher Ground: Migration Response to Natural Disasters in the Early Twentieth Century," American Economic Review, American Economic Association, vol. 102(3), pages 238-244, May.
    2. Bertoli, Simone & Fernández-Huertas Moraga, Jesús, 2013. "Multilateral resistance to migration," Journal of Development Economics, Elsevier, pages 79-100.
    3. Barrios, Salvador & Bertinelli, Luisito & Strobl, Eric, 2006. "Climatic change and rural-urban migration: The case of sub-Saharan Africa," Journal of Urban Economics, Elsevier, vol. 60(3), pages 357-371, November.
    4. Shuaizhang Feng & Michael Oppenheimer & Wolfram Schlenker, 2012. "Climate Change, Crop Yields, and Internal Migration in the United States," NBER Working Papers 17734, National Bureau of Economic Research, Inc.
    5. Brinda Viswanathan & K.S. Kavi Kumar, "undated". "Weather Variability, Agriculture and Rural Migration: Evidence from State and District Level Migration in India," Working papers 83, The South Asian Network for Development and Environmental Economics.
    6. Anirban Mitra & Debraj Ray, 2014. "Implications of an Economic Theory of Conflict: Hindu-Muslim Violence in India," Journal of Political Economy, University of Chicago Press, vol. 122(4), pages 719-765.
    7. Halliday, Timothy, 2006. "Migration, Risk, and Liquidity Constraints in El Salvador," Economic Development and Cultural Change, University of Chicago Press, vol. 54(4), pages 893-925, July.
    8. Tenreyro, Silvana, 2007. "On the trade impact of nominal exchange rate volatility," Journal of Development Economics, Elsevier, vol. 82(2), pages 485-508, March.
    9. Kaivan Munshi & Mark Rosenzweig, 2016. "Networks and Misallocation: Insurance, Migration, and the Rural-Urban Wage Gap," American Economic Review, American Economic Association, vol. 106(1), pages 46-98, January.
    10. Marchiori, Luca & Maystadt, Jean-François & Schumacher, Ingmar, 2012. "The impact of weather anomalies on migration in sub-Saharan Africa," Journal of Environmental Economics and Management, Elsevier, pages 355-374.
    11. Eric Strobl & Marie-Anne Valfort, 2015. "The Effect of Weather-Induced Internal Migration on Local Labor Markets. Evidence from Uganda," World Bank Economic Review, World Bank Group, vol. 29(2), pages 385-412.
    12. Feenstra, Robert C, 2002. "Border Effects and the Gravity Equation: Consistent Methods for Estimation," Scottish Journal of Political Economy, Scottish Economic Society, vol. 49(5), pages 491-506, December.
    13. Halliday, Timothy J., 2012. "Intra-household labor supply, migration, and subsistence constraints in a risky environment: Evidence from rural El salvador," European Economic Review, Elsevier, vol. 56(6), pages 1001-1019.
    14. J. M. C. Santos Silva & Silvana Tenreyro, 2006. "The Log of Gravity," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 641-658, November.
    15. André Gröger & Yanos Zylberberg, 2016. "Internal Labor Migration as a Shock Coping Strategy: Evidence from a Typhoon," American Economic Journal: Applied Economics, American Economic Association, vol. 8(2), pages 123-153, April.
    16. Rafael Reuveny & Will H. Moore, 2009. "Does Environmental Degradation Influence Migration? Emigration to Developed Countries in the Late 1980s and 1990s," Social Science Quarterly, Southwestern Social Science Association, vol. 90(3), pages 461-479.
    17. Maximilian Auffhammer & Solomon M. Hsiang & Wolfram Schlenker & Adam Sobel, 2013. "Using Weather Data and Climate Model Output in Economic Analyses of Climate Change," NBER Working Papers 19087, National Bureau of Economic Research, Inc.
    18. Anna Mayda, 2010. "International migration: a panel data analysis of the determinants of bilateral flows," Journal of Population Economics, Springer;European Society for Population Economics, vol. 23(4), pages 1249-1274, September.
    19. Melissa Dell & Benjamin F. Jones & Benjamin A. Olken, 2009. "Temperature and Income: Reconciling New Cross-Sectional and Panel Estimates," American Economic Review, American Economic Association, vol. 99(2), pages 198-204, May.
    20. David Karemera & Victor Iwuagwu Oguledo & Bobby Davis, 2000. "A gravity model analysis of international migration to North America," Applied Economics, Taylor & Francis Journals, vol. 32(13), pages 1745-1755.
    21. Michel Beine & Christopher Parsons, 2015. "Climatic Factors as Determinants of International Migration," Scandinavian Journal of Economics, Wiley Blackwell, pages 723-767.
    22. Raymond Guiteras & Amir Jina & A. Mushfiq Mobarak, 2015. "Satellites, Self-Reports, and Submersion: Exposure to Floods in Bangladesh," American Economic Review, American Economic Association, vol. 105(5), pages 232-236, May.
    23. Coniglio, Nicola D. & Pesce, Giovanni, 2015. "Climate variability and international migration: an empirical analysis," Environment and Development Economics, Cambridge University Press, pages 434-468.
    24. Melissa Dell & Benjamin F. Jones & Benjamin A. Olken, 2014. "What Do We Learn from the Weather? The New Climate-Economy Literature," Journal of Economic Literature, American Economic Association, vol. 52(3), pages 740-798, September.
    25. Viswanathan, Brinda & Kavi Kumar, K.S., 2015. "Weather, agriculture and rural migration: evidence from state and district level migration in India," Environment and Development Economics, Cambridge University Press, vol. 20(04), pages 469-492, August.
    26. James E. Anderson, 2011. "The Gravity Model," Annual Review of Economics, Annual Reviews, vol. 3(1), pages 133-160, September.
    27. Mitra, Arup & Murayama, Mayumi, 2008. "Rural to Urban Migration: A District Level Analysis for India," IDE Discussion Papers 137, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    28. Maximilian Auffhammer & Solomon M. Hsiang & Wolfram Schlenker & Adam Sobel, 2013. "Using Weather Data and Climate Model Output in Economic Analyses of Climate Change," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 7(2), pages 181-198, July.
    29. Prabir C. Bhattacharya, 2002. "Rural-to-urban migration in LDCS: a test of two rival models," Journal of International Development, John Wiley & Sons, Ltd., vol. 14(7), pages 951-972.
    30. Ghimire, Ramesh & Ferreira, Susana, 2016. "Floods and armed conflict," Environment and Development Economics, Cambridge University Press, vol. 21(01), pages 23-52, February.
    31. Salvador Barrios & Luisito Bertinelli & Eric Strobl, 2010. "Trends in Rainfall and Economic Growth in Africa: A Neglected Cause of the African Growth Tragedy," The Review of Economics and Statistics, MIT Press, vol. 92(2), pages 350-366, May.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Collective reputation; option value; quality;

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mse:cesdoc:13044. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Lucie Label) or (Joanne Lustig). General contact details of provider: http://edirc.repec.org/data/cenp1fr.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.