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Following their larger counterparts, an increasing number of small firms outsource their IT tasks to lower cost offshore destinations. For small firms, however, offshore outsourcing is a difficult undertaking as it involves high transaction costs. Online marketplaces for IT services, which have...
Persistent link: https://www.econbiz.de/10012754144
We analyze firms' investment in product innovation when there are heterogeneous consumer switching costs in markets with an industry leader. We show that higher switching costs require a successful entrant to charge a higher price and increase investment in product innovation to remain...
Persistent link: https://www.econbiz.de/10012863454
If a product has two dimensions of quality, one observable and one not, a firm can use observable quality as a signal of unobservable quality. The correlation between consumers' valuation of high quality in each dimension is a key determinant of the feasibility of such signaling. A firm may use...
Persistent link: https://www.econbiz.de/10008905517
The paper is based on the acknowledgement that properties of markets stemming from features of demand are too frequently overlooked in the economic literature, and a re-balancing is necessary to properly account for theoretical and empirical phenomena. We sustain that one of the most relevant...
Persistent link: https://www.econbiz.de/10008732415
Viscusi (1978) shows how, in markets with quality uncertainty, perfect certification results in separation from top down due to an unraveling process similar to Akerlof (1970). De and Nabar (1991) argue that imperfect certification prevents unraveling so that equilibria with full separation do...
Persistent link: https://www.econbiz.de/10003985597
If a product has two dimensions of quality, one observable and one not, a firm can use observable quality as a signal of unobservable quality. The correlation between consumers’ valuation of high quality in each dimension is a key determinant of the feasibility of such signaling. A firm may...
Persistent link: https://www.econbiz.de/10003986085
This paper empirically analyzes the determinants of demand in the German automobile industry. Our primary goal is to refine the existing literature on that topic by exploring the impact of uniqueness seeking behaviour of individuals on the demand schedule. Using a dataset on the segment of...
Persistent link: https://www.econbiz.de/10003857726
We investigate the impact of self-organized reputation versus certification by an independent institution on demand for online shops. Using data from a large Austrian price comparison site, we show that quality seals issued by a credible and independent institution increase demand more than...
Persistent link: https://www.econbiz.de/10009376081
This paper studies the relationship between transparency on the consumer side and productivity of firms. We show that more transparent markets are characterized by higher average productivity as firms with low productivity abstain from entering these markets. -- Market Transparency ; Firm...
Persistent link: https://www.econbiz.de/10009380266
Persistent link: https://www.econbiz.de/10009154775