Signaling Quality by Delaying Sales

Francesco Squintani ()

No 476, RCER Working Papers from University of Rochester - Center for Economic Research (RCER)

Abstract: This paper studies the problem of a monopolist privately informed about its product quality, who can sell its product in advance, and faces forward-looking buyers who learn about the quality over time. We show that if the monopolist prefers to sell sooner than later, the unique equilibrium satisfying a standard refinement criterion will be such that high-quality monopolists will postpone sales so as to separate themselves from low-quality ones. An application of the analysis is the allocation of sales among season tickets for sport or musical events. Several testable implications are derived in the comparative static analysis. A somewhat unexpected result is that an increase in the precision of the monopolist's information has a negative effect on economic efficiency.

Keywords: Asymmetric Information; Signaling; Dynamic Monopoly; Timing of Sales; Stochastic and Dynamic Games. (search for similar items in EconPapers)
JEL-codes: C73 D42 D83 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2000-10
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:roc:rocher:476

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