Imperfect certification in a Bertrand duopoly

Bottega, Lucie and De Freitas, Jenny (2019) Imperfect certification in a Bertrand duopoly. Economics Letters, 178. pp. 33-36.

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Official URL: http://tse-fr.eu/pub/123561

Abstract

A label that imperfectly signals product quality is analyzed in a Bertrand duopoly with differentiated products. Considering strategic firms when certification is imperfect has some important implications. A separating equilibrium can be sustained with a free test due to price strategic complementarity. When the certifier’s objective is welfare, and the test cost is sufficiently small, the most appropriate test is that which is subject to a low rate of false negatives.

Item Type: Article
Language: English
Date: 2019
Refereed: Yes
Uncontrolled Keywords: Asymmetric informationQuality certificationImperfect testLabelingBertrand duopolySeparating equilibrium
JEL codes: C72 - Noncooperative Games
D43 - Oligopoly and Other Forms of Market Imperfection
D60 - General
D82 - Asymmetric and Private Information
L15 - Information and Product Quality; Standardization and Compatibility
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 26 Sep 2019 09:33
Last Modified: 26 Sep 2019 09:33
OAI ID: oai:tse-fr.eu:123561
URI: http://publications.ut-capitole.fr/id/eprint/32786

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