Pricing and signaling with frictions

A-Tier
Journal: Journal of Economic Theory
Year: 2013
Volume: 148
Issue: 4
Pages: 1301-1332

Authors (2)

Delacroix, Alain (not in RePEc) Shi, Shouyong (Queen's University)

Score contribution per author:

2.011 = (α=2.01 / 2 authors) × 2.0x A-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We study a market where each seller chooses the quality and price of goods and the number of selling sites. Observing sellersʼ choices of prices and sites, but not quality, buyers choose which site to visit. A sellerʼs choices of prices can direct buyersʼ search and signal quality. A unique equilibrium exists and is separating. When the quality differential is large, the equilibrium implements the efficient allocation with public information. Otherwise, the quality of goods and/or the number of sites created is inefficient, due to a conflict between the search-directing and signaling roles of prices.

Technical Details

RePEc Handle
repec:eee:jetheo:v:148:y:2013:i:4:p:1301-1332
Journal Field
Theory
Author Count
2
Added to Database
2026-01-25