Collusion and turnover in experience goods markets
Tóm tắt
We study an infinite horizon duopoly with identical long-lived firms and a sequence of short-lived consumers. Consumers are willing to pay more for a higher-quality good, but quality is a noisy function of the firm’s unobserved effort, and it cannot be observed by consumers prior to purchase. We show that a duopoly can overcome this moral hazard problem, and that it can outperform a monopoly in terms of both efficiency and producer surplus. Specifically, we consider collusive N-turnover equilibria, which involve buyers switching firms in perpetuity, i.e., buying from one firm until that firm delivers bad quality N times, and then switching to the other firm. We show (1) that first-best efficiency can be achieved by duopoly in a collusive N-turnover equilibrium, even when monopoly cannot avoid deadweight loss, and (2) that monopoly profit in any equilibrium is strictly dominated by joint duopoly profit in some collusive N-turnover equilibrium.
Tài liệu tham khảo
Bar-Isaac H (2005) Imperfect competition and reputational commitment. Econ Lett 89(2):167–173
Bar-Isaac H, Tadelis S (2008) Seller reputation. Found Trends Microecon 4(4):273–351
Chandrasekher M (2015) Unravelling in a repeated principal-agent model with multiple agents. Theor Econ 10(1):11–49
Dana J, Fong Y (2011) Product quality, reputation, and market structure. Int Econ Rev 52(4):1059–1076
Escobar J, Toikka J (2013) Efficiency in games with markovian private information. Econometrica 81(5):1887–1934
Fudenberg D, Levine D (1992) Maintaining a reputation when strategies are imperfectly observed. Rev Econ Stud 59(3):561–579
Gilbert R, Newbery D (1982) Preemptive patenting and the persistence of monopoly. Am Econ Rev 72(3):514–526 June
Holmstrom B (1999) Managerial incentive problems: a dynamic perspective. Rev Econ Stud 66:169–182
Hörner J (2002) Reputation and competition. Am Econ Rev 92:644–663
Ivaldi M, Jullien B, Rey P, Seabright P, Tirole J (2007) The economics of tacit collusion: implications for merger control. In: Ghosal V, Stennek J (eds) The political economy of antitrust. Elsevier, Amsterdam
Klein B, Leffler K (1981) The role of market forces in assuring contractual performance. J Political Econ 89:615–641
Kranton R (2003) Competition and the incentive to produce high quality. Economica 70:385–401
Mailath G, Samuelson L (2001) Who wants a good reputation? Rev Econ Stud 68:415–441
Mailath G, Samuelson L (2006) Repeated games and reputations: long-run relationships?. Oxford University Press, Oxford
Matsushima H (2004) Repeated games with private monitoring: two players. Econometrica 72(3):823–852
Radner R (1985) Repeated principal-agent games with discounting. Econometrica 53(5):1173–1186
Reinganum J (1983) Uncertain innovation and the persistence of monopoly. Am Econ Rev 73(4):741–748
Rob R, Sekiguchi T (2006) Reputation and turnover. RAND J Econ 37:341–361
Yi S (1995) Uncertain innovation and persistence of monopoly revisited. Econ Lett Elsevier 49(3):319–322 September