MPhil in Economics - Competition from Search Goods
8:30am - 10:30am
Room 6045 Lee Shau Kee Business Building
This paper studies a market in which an unique seller selling product with unobservable quality before purchasing(experience goods), a multitude of sellers selling products with certain qualities(search goods) and some heterogeneous consumers obtaining dierent taste in qualities. Search goods competitors drive the price of high quality goods down and improve surplus of consumers with low valuation of quality (low-end consumers). We point out conditions for an experience goods seller to maintain a high reputation in dierent ways. When search goods sellers produce at a minimum quality, competition always frustrates experience goods seller if he tries to sell high quality goods to all consumers. However, it facilitates the experience goods seller to trade with consumers with a higher valuation about high quality(high-end consumers). When competition is intensified as search goods sellers produce at a higher quality, competition can be harmful in sense that all types of high-quality equilibria are harder to be sustained.
Event Format
Candidate
Miss Lin ZHAO
Language
English
English
Recommended For
Faculty and staff
UG students
Contact
Ext. 7622 Cindy