Bardey, David, Gromb, Denis Emmanuel, Martimort, David and Pouyet, Jérôme (2020) Controlling sellers who provide advice: regulation and competition. Journal of Industrial Economics, vol. 68 (n° 3). pp. 409-444.

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Identification Number : 10.1111/joie.12228


A monopoly seller advising buyers about which of two goods fits their needs may be tempted to recommend the higher margin good. For the seller to collect information about a buyer’s needs and provide truthful advice, the profits from selling both goods must be similar enough, i.e., within an implementability cone. The optimal regulation controls pricing distortions and information-collection incentives separately via price regulation and fixed rewards respectively. This no longer holds when the seller has private information about costs as both problems interact. We study whether competition and the threat by buyers to switch sellers can substitute for regulation

Item Type: Article
Language: English
Date: September 2020
Refereed: Yes
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 16 Mar 2021 12:18
Last Modified: 22 Feb 2023 13:54
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