Experience goods and provision of quality

Research output: Contribution to journalArticleProfessional

Abstract

Delacroix and Shi (Pricing and signaling with frictions, Journal of Economics Theory 2013) study a model featuring buyers with unit demands and sellers with unit supplies. The sellers may produce a high- or a low-quality good. The buyers get a signal about quality but the signalling technology is quite specific; the signal is either completely revealing or uninformative. The author studies the same model with a symmetric signalling technology where high and low signals are always got with positive probability. As a consequence, whenever high-quality goods are produced also low-quality goods are produced. Instead of price posting the author studies trading by auctions. There are two equilibria, and the author quantifies the efficiency loss due to asymmetric information.
Original languageEnglish
JournalEconomics. Discussion papers
Volume2017-19
Number of pages15
Publication statusPublished - 28 Apr 2017
MoE publication typeD1 Article in a trade journal

Fields of Science

  • 511 Economics

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