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We study a game in which two competing sellers supplying experience goods of different quality can induce a perspective buyer into a bad purchase through (costly) deceptive advertising. We characterize the equilibrium set of the game and argue that an important class of these outcomes features...
Persistent link: https://www.econbiz.de/10011774615
randomized experiment, we demonstrate increased salience of patent status heightens consumers' beliefs that products are … five years, we find no evidence consumers respond to increased patent salience …
Persistent link: https://www.econbiz.de/10014347720
This paper focuses on competition between an incumbent and an entrant when only the entrant's quality is unknown to (some) consumers. The incumbent may or may not know the entrant's quality. The model reveals a separating equilibrium where the entrant's high price signals its high quality when...
Persistent link: https://www.econbiz.de/10014126519
We consider a market for lemons in which the seller is a monopolistic price setter and the buyer receives a private noisy signal of the product’s quality. We model this as a game and analyze perfect Bayesian equilibrium prices, trading probabilities and gains of trade. In particular, we vary...
Persistent link: https://www.econbiz.de/10009752430
We develop a theoretical framework to investigate the impact of patent policies and emis- sion taxes on green … innovation that reduces the emission output ratio, and on the emission level. In the absence of green consumers, the introduction … in the emission level, which may be avoided by reducing the patenting cost. In the presence of green consumers, this …
Persistent link: https://www.econbiz.de/10012868858
It has been argued that cognitively constrained consumers respond sub-optimally to complex decision problems, and that firms can exploit these limitations by introducing spurious complexity into tariff structures, weakening price competition. We model a countervailing force. Restricting one's...
Persistent link: https://www.econbiz.de/10013155527
It has been argued that cognitively constrained consumers respond sub-optimally to complex decision problems, and that firms can exploit these limitations by introducing spurious complexity into tariff structures, weakening price competition. We model a countervailing force. Restricting one's...
Persistent link: https://www.econbiz.de/10003886816
Behavioural and industrial economists have argued that, because of cognitive limitations, consumers are liable to make sub-optimal choices in complex decision problems. Firms can exploit these limitations by introducing spurious complexity into tariff structures, weakening price competition....
Persistent link: https://www.econbiz.de/10012728539
Persistent link: https://www.econbiz.de/10011991407
We compare certification to a minimum quality standard (MQS) policy in a duopolistic industry where firms incur quality-dependent fixed costs and only a fraction of consumers observes the quality of the offered goods. Compared to the unregulated outcome, both profits and social welfare would...
Persistent link: https://www.econbiz.de/10014163570