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We study a firm's incentives to build and maintain reputation for quality, when quality is persistent and can be … investment– depend only on the firm's reputation. MPE vary in frequency of certification and payoffs, but are generally …
Persistent link: https://www.econbiz.de/10012968136
a firm with a low reputation to reestablish itself. But, the ability to promote can crowd out incentives for investment … at high reputations; the firm allows its reputation to decay more before it is renewed relative to a firm motivated by …
Persistent link: https://www.econbiz.de/10012855106
Persistent link: https://www.econbiz.de/10003983854
Persistent link: https://www.econbiz.de/10009423388
There is widespread evidence that some firms use false advertising to overstate the value of their products. Using a … advertising actively influences rational buyers. We analyze the effects of policy under different welfare objectives and establish … a set of demand and parameter conditions where policy optimally permits a positive level of false advertising. Further …
Persistent link: https://www.econbiz.de/10011448725
There is widespread evidence that some firms use false advertising to overstate the value of their products. We … advertising actively influences rational buyers, and analyze the effects of policy under different welfare objectives. We … establish precise conditions where policy optimally permits a positive level of false advertising, and show how these conditions …
Persistent link: https://www.econbiz.de/10011660613
Asymmetric information is an important source of inefficiency when an asset (such as a firm) is transacted. The two main sources of this asymmetry are the unobserved idiosyncratic characteristics of the asset (such as future profitability) and unobserved idiosyncratic choices (like secret price...
Persistent link: https://www.econbiz.de/10013074026
Asymmetric information is an important source of inefficiency when assets (like firms) are transacted. The two main sources of this asymmetry are unobserved idiosyncratic characteristics of the asset (for example, quality) and unobserved idiosyncratic choices (actions done by the current...
Persistent link: https://www.econbiz.de/10014170975
We study a simple model in which two vertically differentiated firms compete in prices and mass advertising on an … advertising cost and quality differential (relative advertising cost), either there is no equilibrium in pure strategies or there … advertising cost goes to infinity, prices become equal and the advertising intensities converge to zero as well as the profits …
Persistent link: https://www.econbiz.de/10014636238
With credence goods consumers cannot judge the quality they receive compared to the quality they need. The needed quality can only be observed by an expert seller who may exploit the information asymmetry by cheating. In recent years various contributions have analyzed the credence goods problem...
Persistent link: https://www.econbiz.de/10014137904