Entry and experimentation in oligopolistic markets for experience goods

Arbeitspapier

We investigate a two-period Bertrand market in which one seller introduces a new product of uncertain quality. The new product competes with an alternative good of known quality. Ex ante neither sellers nor consumers know the value of the new product. While consumers can learn their valuation by actual consumption (experimentation), sellers cannot observe experimentation outcomes. Thus, asymmetric information arises if the buyer experiments. As a result, the equilibrium is inefficient, and too little entry occurs.

Object Details

• Alternative title: Markteintritt und Experimentation in oligopolistischen Märkten für Erfahrungsgüter
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: WZB Discussion Paper ; No. FS IV 02-13

Classification and Topics

• Classification: Wirtschaft ; Oligopoly and Other Imperfect Markets ; Information and Product Quality; Standardization and Compatibility ; Asymmetric and Private Information; Mechanism Design ; Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
• Subject: Entry ; experimentation ; asymmetric information ; bandit problem ; Bertrand competition

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Krähmer, Daniel
• Event: Veröffentlichung
• (who): Wissenschaftszentrum Berlin für Sozialforschung (WZB)
• (where): Berlin
• (when): 2002

Further information

• Handle: http://hdl.handle.net/10419/51158
• Last update: 10.03.2025, 11:42 AM CET