Practices (revised)

Max Blouin and Jean-Marc Bourgeon

Cahiers de recherche from CIRPEE

Abstract: We examine an economy where professionals provide services to clients and where a professional can sell his practice to another. Professionals vary in quality, and clients in their need (or willingness-to-pay) for high-quality service. Efficiency is measured as the number of matches between high-quality professionals and high-need clients. However, agent types are unobservable a priori. We find that trade in practices can facilitate the transmission of information about agent types. In general full efficiency is achieved, but equilibrium is not always robust to random shocks. A tax on the sale of practices ensures the existence of robust, efficient equilibria.

Keywords: Signaling; professional services; practices; reputation (search for similar items in EconPapers)
JEL-codes: C73 D82 (search for similar items in EconPapers)
Date: 2008
New Economics Papers: this item is included in nep-cta
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Persistent link: https://EconPapers.repec.org/RePEc:lvl:lacicr:0805

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