Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/108947
Authors: 
Huck, Steffen
Lünser, Gabriele K.
Tyran, Jean-Robert
Year of Publication: 
2015
Series/Report no.: 
WZB Discussion Paper SP II 2013-312r
Abstract: 
We experimentally examine the effects of price competition in markets for expe-rience goods where sellers can build up reputations for quality. We compare price competition to monopolistic markets and markets where prices are exogenously fixed (somewhere between the endogenous oligopoly and monopoly prices). While oligopolies benefit consumers regardless of whether prices are fixed or endoge-nously chosen, we find that price competition lowers efficiency as consumers pay too little attention to reputation for quality. This provides empirical support to recent models in behavioral industrial organization that assume that consumers may with increasing complexity of the market place focus on selected dimensions of products. We also find that consumers' attention to quality and, hence, provided quality drops when regulated prices are set at levels that are too low.
Subjects: 
Markets
Price competition
Behavioral IO
Price regulation
Reputation
Trust
Moral hazard
Experience goods
JEL: 
C72
C90
D40
D80
L10
Document Type: 
Working Paper

Files in This Item:
File
Size
320.53 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.