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- W1608147049 abstract "ABSTRACT Experts vs Discounters: Competition and Market Unravelling When Consumers Do Not Know What they Need This paper studies price competition between experts and discounters in a market for credence goods. While experts can identify a consumer's problem by exerting costly but unobservable diagnosis effort, discounters just sell treatments without giving any advice. The unobservability of diagnosis effort induces experts to use their tariffs as signaling devices. This makes them vulnerable to competition by discounters. We explore the conditions under which experts survive competition by discounters and find that there exist situations in which adding a single customer to a large population of existing consumers leads to a switch from an experts only to a discounters only market. JEL Classification: D40, D82 and L15 Keywords: credence goods, discounters, experts and vertical restraints Uwe Dulleck Department of Economics University of Vienna Hohenstaufengasse 9 A-1010 Vienna AUSTRIA Tel: (43 1) 4277 37427 Fax: (43 1) 4277 9374 Email: uwe.dulleck@univie.ac.at" @default.
- W1608147049 created "2016-06-24" @default.
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- W1608147049 date "2005-09-01" @default.
- W1608147049 modified "2023-09-23" @default.
- W1608147049 title "Experts vs Discounters: Competition and Market Unravelling When Consumers Do Not Know What they Need" @default.
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