Drugs, Showrooms and Financial Products: Competition and Regulation when Sellers Provide Expert Advice

Jerome Pouyet, David Bardey, Denis Gromb and David Martimort

No 11665, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We consider a market in which sellers can exert an information-gathering effort to advise buyers about which of two goods best fits their needs. Sellers may steer buyers towards the higher margin good. We show that for sellers to collect and reveal information, profits on both goods must be sufficiently close to each other, i.e., lie within an implementability cone, which competition or regulation may ensure. Instruments to do so vary with the context. Controlling market power while improving the quality of advice is more difficult when sellers have private information on the profitability of the goods.

Keywords: Mis-selling; Expertise; Retailing; Competition; Regulation; Asymmetric information (search for similar items in EconPapers)
JEL-codes: D82 G24 I11 L13 L15 L51 (search for similar items in EconPapers)
Date: 2016-11
New Economics Papers: this item is included in nep-com, nep-ind, nep-mic and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Drugs, Showrooms and Financial Products: Competition and Regulation When Sellers Provide Expert Advice (2017)
Working Paper: Drugs, Showrooms and Financial Products: Competition and Regulation when Sellers Provide Expert Advice (2016)
Working Paper: Drugs, Showrooms and Financial Products: Competition and Regulation when Sellers Provide Expert Advice (2016)
Working Paper: Drugs, Showrooms and Financial Products: Competition and Regulation When Sellers Provide Expert Advice (2016)
Working Paper: Drugs, Showrooms and Financial Products: Competition and Regulation when Sellers Provide Expert Advice (2016)
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