On Reputational Rents as an Incentive Mechanism in Competitive Markets

Bernardita Vial and Felipe Zurita

No 354, Documentos de Trabajo from Instituto de Economia. Pontificia Universidad Católica de Chile.

Abstract: 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.

Keywords: Reputation; rents; competition; adverse selection; experience good; public monitoring (search for similar items in EconPapers)
JEL-codes: D41 D82 L15 (search for similar items in EconPapers)
Date: 2009
New Economics Papers: this item is included in nep-com, nep-cta and nep-mic
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https://www.economia.uc.cl/docs/doctra/dt-354.pdf (application/pdf)

Related works:
Working Paper: On Reputational Rents as an Incentive Mechanism in Competitive Markets (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:ioe:doctra:354

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