Imperfect competition and quality signalling

• 成果类型: Article
• 署名作者: Daughety, Andrew F.; Reinganum, Jennifer F.
• 署名单位: Vanderbilt University
• 刊物名称: RAND JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0741-6261
• DOI: 10.1111/j.0741-6261.2008.00008.x
• 发表日期: 2008
• 页码: 163-183
• 关键词: advertising signals; entry deterrence; price; duopoly

摘要

We examine the interplay of imperfect competition and incomplete information in the context of price competition among firms producing horizontally and vertically differentiated substitute products. Incomplete information about vertical quality (consumer satisfaction) signalled via price softens price competition. Low-quality firms always prefer the incomplete information game to the full-information analog. Moreover, for high-value markets with a sufficiently high proportion of high-quality firms, these firms also prefer incomplete information to full information. We find that an increase in the loss to consumers associated with the low-quality product may perversely benefit low-quality firms; we consider applications to tort reform and professional licensing.