In this note we develop a pure hidden action model of reputation and repeated Bertrand competition, where firms are homogeneous, entry is free, and consumers infer future non-contractible quality both from information about past quality and from current prices. We show that a positive level of quality is sustained as an outcome of a stationary equilibrium, together with a social convention about the minimum acceptable quality. If instead the social convention is not relevant, more entry occurs at the cost of worse quality and lower consumer welfare. Keywords: reputation, pure hidden action, Bertrand competition, social convention
Fedele, A., Tedeschi, P., Reputation and Competition with Social Convention, <<REPUTATION AND COMPETITIONWITH SOCIAL CONVENTION>>, 2011; (Novembre): 1-9 [http://hdl.handle.net/10807/31131]
Autori: | ||
Titolo: | Reputation and Competition with Social Convention | |
Data di pubblicazione: | 2011 | |
Abstract: | In this note we develop a pure hidden action model of reputation and repeated Bertrand competition, where firms are homogeneous, entry is free, and consumers infer future non-contractible quality both from information about past quality and from current prices. We show that a positive level of quality is sustained as an outcome of a stationary equilibrium, together with a social convention about the minimum acceptable quality. If instead the social convention is not relevant, more entry occurs at the cost of worse quality and lower consumer welfare. Keywords: reputation, pure hidden action, Bertrand competition, social convention | |
Lingua: | Inglese | |
Editore: | IELI | |
Titolo del libro: | REPUTATION AND COMPETITION WITH SOCIAL CONVENTION | |
Citazione: | Fedele, A., Tedeschi, P., Reputation and Competition with Social Convention, <<REPUTATION AND COMPETITIONWITH SOCIAL CONVENTION>>, 2011; (Novembre): 1-9 [http://hdl.handle.net/10807/31131] | |
Appare nelle tipologie: | Quaderno, Working paper, Paper (di dipartimento / istituto / progetti) |