Arbeitspapier

Endogenous Entry in Markets with Unobserved Quality

In markets for experience or credence goods adverse selection can drive out higher quality products and services. This negative implication of asymmetric information about product quality for trading and welfare, poses the question of how such markets first originate. We consider a market in which sellers make observable investment decisions to enter a market in which each seller's quality becomes private information. Entry has the tendency to lower prices, which may lead to adverse selection. The implied price collapse limits the amount of entry so that high prices are sustained in equilibrium, which results in above normal profits. The analysis suggests that rather than observing the canonical market collapse, markets with asymmetric information about product quality may instead be characterized by above normal profits even in markets with low measures of concentration and less entry than would be expected.

Sprache
Englisch

Erschienen in
Series: EAG Discussion Paper ; No. EAG 12-6

Klassifikation
Wirtschaft
Thema
adverse selection
asymmetric information
quality
experience goods
cre- dence goods
entry
entry barriers

Ereignis
Geistige Schöpfung
(wer)
Creane, Anthony
Jeitschko, Thomas D.
Ereignis
Veröffentlichung
(wer)
U.S. Department of Justice, Antitrust Division, Economic Analysis Group (EAG)
(wo)
Washington, DC
(wann)
2012

Handle
Letzte Aktualisierung
10.03.2025, 11:42 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Creane, Anthony
  • Jeitschko, Thomas D.
  • U.S. Department of Justice, Antitrust Division, Economic Analysis Group (EAG)

Entstanden

  • 2012

Ähnliche Objekte (12)