Ratings design and barriers to entry

• 成果类型: Article
• 署名作者: Vellodi, Nikhil
• 署名单位: Paris School of Economics; Centre National de la Recherche Scientifique (CNRS)
• 刊物名称: THEORETICAL ECONOMICS
• ISSN/ISSBN: 1933-6837
• DOI: 10.3982/TE6338
• 发表日期: 2026
• 关键词: selection; reputation; DYNAMICS; systems; LEVEL

摘要

I study the impact of consumer reviews on the incentives for firms to participate in the market. I develop a model of endogenous entry in which firms produce goods of heterogeneous, unknown quality. Consumers engage in directed search, and prices are exogenously fixed. A rater uses consumer reviews to construct firm-specific ratings that are informative of quality and help consumers direct their search. The main insight of the paper is that suppressing the reviews of highly-rated firms strengthens entry incentives and improves consumer welfare.