Second Opinions and Price Competition: Inefficiency in the Market for Expert Advice
نویسندگان
چکیده
We analyze a market where the consumer must rely on experts to identify the correct type of service. Medical services, repair services and various types of consulting and advisory services belong to this broad category. Our focus is on situations where the diagnosis of the consumers needs is costly and the experts effort is unobservable. We develop a model where experts offer competing contracts and the consumer may gather multiple opinions. We explore the incentives that a competitive sampling of prices and opinions provides for experts to exert effort and Þnd that there is a tension between price competition and the quality of the advise provided in equilibrium. The equilibrium fails to realize the second best welfare optimum. On the other hand, limiting price competition via price control increases total welfare.
منابع مشابه
Investigating the Competition Status and the Impact of Market Power on Electricity Price: Case of Iran's Wholesale Electricity Market
Policy makers need to be acquainted with market competition statue. it would ease the decision making and restructuring of market. The aim of this study is to measure the competition of the wholesale electricity market and then investigate the impact of market power on wholesale electricity price during 2013 to 2017. The Result shows that market share of P.U.s in the wholesale electricity marke...
متن کاملInvestigating the Competition Status and the Impact of Market Power on Electricity Price: Case of Iran's Wholesale Electricity Market
Policy makers need to be acquainted with market competition statue. it would ease the decision making and restructuring of market. The aim of this study is to measure the competition of the wholesale electricity market and then investigate the impact of market power on wholesale electricity price during 2013 to 2017. The Result shows that market share of P.U.s in the wholesale electricity marke...
متن کاملPricing Approaches for Investment Companies
The main business of an investment company is to hold and manage securities for investment purposes. In today competitive market Pricing and its methodology are complicated motions. It is very important to define a price that can prevail the competition in an open and free market. In order to define the price certain circumstances should be considered. In the academic arena there have been seve...
متن کاملEffects of Wind Power plants on Energy Price and Power Systems Reliability in Imperfect Competition Electricity Market
The benefits of wind power generation have led to an ever-increasing expansion of wind farms around the world. The low cost of production and the environmental benefits of wind farms are some of the main reasons for using wind energy. On the other hand, uncertainty costs in the production and control of the output of wind turbines are among the problems that are being encountered for electricit...
متن کاملApplying Stackelberg Game to Find the Best Price and Delivery Time Policies in Competition between Two Supply Chains
In this paper, the competition between two supply chains and their elements is studied. Each chain consisted of a manufacturer and a distributor and the two chains compete in a market with single type of customer sensitive to price and delivery time. Therefore, this is a two-supply chain game and during the competition between two supply chains, elements of each supply chain (manufacturer and/o...
متن کامل