On Reputational Rents as an Incentive Mechanism in Competitive Markets

• Autores: Bernardita Vial, Felipe Zurita
• Localización: Documentos de Trabajo ( Instituto de Economía PUC ), ISSN-e 0717-7593, Nº. 354, 2009
• Idioma: inglés
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• Resumen

  • This paper shows that more intense competition may improve, rather than hamper, the chances that a market for an experience good or service overcomes the problems caused by informational asymmetries. This, in spite of the fact that intensified competition diminishes the reputational rents that -allegedly- provide the incentives for the production of high quality. Our results show that instead, these incentives are created by price differentials not levels.