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Qualitätsunsicherheit als Ursache von Marktversagen - Anpassungsmechanismen und Regulierungsbedarf
Get PDFThis dissertation analyzes market failure under quality uncertainty and develops the goodwill approach as an alternative to signalling models in information economics. The study focuses on the existence of irreversible entry costs that arise endogenously from informational frictions rather than from explicit expenditures such as advertising or introductory pricing.
The central idea is that new entrants in markets with incomplete consumer information cannot immediately sell their profit-maximizing output at the prevailing market price, because consumers initially lack sufficient trust in their product quality. As a result, newcomers must operate temporarily at higher average costs than established firms. Market entry therefore continues only as long as incumbent suppliers earn prices that at least compensate these initial cost disadvantages. In equilibrium, price premia for high-quality products persist even under free market entry.
These equilibrium premia provide the incentive for established firms to maintain product quality: as long as the present value of future price premia exceeds the potential short-term gain from hidden quality deterioration, quality will be sustained. Non-cost-covering introductory prices or advertising expenses are not essential components of the goodwill model but represent optional instruments to reduce the irreversible costs of market entry.
Beyond this theoretical contribution, the dissertation discusses the resulting implications for competition policy and regulation in markets characterized by persistent quality uncertainty
Going Beyond Counting First Authors in Author Co-citation Analysis
Get PDFThe present study examines one of the fundamental aspects of author co-citation analysis (ACA) - the way co-citation
counts are defined. Co-citation counting provides the data on which all subsequent statistical analyses and mappings
are based, and we compare ACA results based on two different types of co-citation counting - the traditional type that
only counts the first one among a cited work's authors on the one hand and a non-traditional type that takes into
account the first 5 authors of a cited work on the other hand. Results indicate that the picture produced through this non-traditional author co-citation counting contains more coherent author groups and is therefore considerably clearer. However, this picture represents fewer specialties in the research field being studied than that produced through the traditional first-author co-citation counting when the same number of top-ranked authors is selected and analyzed. Reasons for these effects are discussed
Qualitätsunsicherheit als Ursache von Marktversagen Anpassungsmechanismen und Regulierungsbedarf
No full textQualitätsunsicherheit als Ursache von Marktversagen: Anpassungsmechanismen und Regulierungsbedarf (Überarbeitete Fassung)
No full textThis revised version corrects minor errors in the mathematical equations of the previous version (MPRA Paper No. [126467]). The theoretical argument and main conclusions remain unchanged.
The paper examines quality uncertainty as a source of market failure and analyzes the resulting adjustment mechanisms and regulatory implications.
This dissertation analyzes market failure under quality uncertainty and develops the goodwill approach as an alternative to signalling models in information economics. The study focuses on the existence of irreversible entry costs that arise endogenously from informational frictions rather than from explicit expenditures such as advertising or introductory pricing.
The central idea is that new entrants in markets with incomplete consumer information cannot immediately sell their profit-maximizing output at the prevailing market price, because consumers initially lack sufficient trust in their product quality. As a result, newcomers must operate temporarily at higher average costs than established firms. Market entry therefore continues only as long as incumbent suppliers earn prices that at least compensate these initial cost disadvantages. In equilibrium, price premia for high-quality products persist even under free market entry.
These equilibrium premia provide the incentive for established firms to maintain product quality: as long as the present value of future price premia exceeds the potential short-term gain from hidden quality deterioration, quality will be sustained. Non-cost-covering introductory prices or advertising expenses are not essential components of the goodwill model but represent optional instruments to reduce the irreversible costs of market entry.
Beyond this theoretical contribution, the dissertation discusses the resulting implications for competition policy and regulation in markets characterized by persistent quality uncertainty
Das Goodwill-Modell des Wettbewerbsmarktes: Vertrauen ermöglichen und Arbeitsplätze schaffen
Get PDFThe Goodwill Model of the Competitive Market
Allowing for Trust and Creating Jobs
Consumers often cannot judge the quality of goods and services at the time of the purchase decision. The goodwill model explains how the market participants deal with this problem. It makes a distinction between markets for search goods, experience goods and credence goods. In markets for experience goods the goodwill mechanism can ensure completely by itself that suppliers behave with integrity. The goodwill mechanism causes irreversible costs of the market entrance in the form of goodwill investments for new suppliers. These irreversible costs of the market entrance lead to the fact that established suppliers can permanently achieve prize and volume premiums if they behave with integrity. Established suppliers, therefore, abstain from a hidden reduction of the quality of their products. The strength of the goodwill mechanism lies in the fact that it adapts itself in markets for experience goods to changed circumstances of the market by changes in the communications behavior of the market participants and thereby it stabilizes the market development and optimizes the market result. Markets for credence goods, however, are, in spite of the social institution Goodwill, characterized by market failure. The root causes for this result are selected sporadic bad quality deliveries which cannot be recognized by the consumers as those. Suitable regulations to stabilize markets for credence goods artificially generate irreversible costs of the market entrance for new suppliers. These created irreversible costs enable the established suppliers of credence goods to permanently earn positive economic profits by behaving with integrity. Numerous regulations which exist today in functioning markets for credence goods establish such irreversible costs of the market entrance. The abolition of such regulations can lead to market failure. An example having a lasting effect even today is the transformation which occurred between 1980 and 1999 of the US banking system which developed from a system of separated commercial and investment banks to a system of fully integrated banks
Qualitätsunsicherheit als Ursache von Marktversagen - Anpassungsmechanismen und Regulierungsbedarf
No full textThis dissertation analyzes market failure under quality uncertainty and develops the goodwill approach as an alternative to signalling models in information economics. The study focuses on the existence of irreversible entry costs that arise endogenously from informational frictions rather than from explicit expenditures such as advertising or introductory pricing.
The central idea is that new entrants in markets with incomplete consumer information cannot immediately sell their profit-maximizing output at the prevailing market price, because consumers initially lack sufficient trust in their product quality. As a result, newcomers must operate temporarily at higher average costs than established firms. Market entry therefore continues only as long as incumbent suppliers earn prices that at least compensate these initial cost disadvantages. In equilibrium, price premia for high-quality products persist even under free market entry.
These equilibrium premia provide the incentive for established firms to maintain product quality: as long as the present value of future price premia exceeds the potential short-term gain from hidden quality deterioration, quality will be sustained. Non-cost-covering introductory prices or advertising expenses are not essential components of the goodwill model but represent optional instruments to reduce the irreversible costs of market entry.
Beyond this theoretical contribution, the dissertation discusses the resulting implications for competition policy and regulation in markets characterized by persistent quality uncertainty
The Goodwill Modell of the Competitive Market: Allowing for trust and creating jobs
Get PDFThe Goodwill Model of the Competitive Market Allowing for Trust and Creating Jobs Consumers often cannot judge the quality of goods and services at the time of the purchase decision. The goodwill model explains how the market participants deal with this problem. It makes a distinction between markets for search goods, experience goods and credence goods. In markets for experience goods the goodwill mechanism can ensure completely by itself that suppliers behave with integrity. The goodwill mechanism causes irreversible costs of the market entrance in the form of goodwill investments for new suppliers. These irreversible costs of the market entrance lead to the fact that established suppliers can permanently achieve prize and volume premiums if they behave with integrity. Established suppliers, therefore, abstain from a hidden reduction of the quality of their products. The strength of the goodwill mechanism lies in the fact that it adapts itself in markets for experience goods to changed circumstances of the market by changes in the communications behavior of the market participants and thereby it stabilizes the market development and optimizes the market result. Markets for credence goods, however, are, in spite of the social institution Goodwill, characterized by market failure. The root causes for this result are selected sporadic bad quality deliveries which cannot be recognized by the consumers as those. Suitable regulations to stabilize markets for credence goods artificially generate irreversible costs of the market entrance for new suppliers. These created irreversible costs enable the established suppliers of credence goods to permanently earn positive economic profits by behaving with integrity. Numerous regulations which exist today in functioning markets for credence goods establish such irreversible costs of the market entrance. The abolition of such regulations can lead to market failure. An example having a lasting effect even today is the transformation which occurred between 1980 and 1999 of the US banking system which developed from a system of separated commercial and investment banks to a system of fully integrated banks.Goodwill; reputation; price premiums; mouth-to-mouth-information; sunk costs; quality uncertainty; search goods; experience goods; credence goods; minimum quality; behavior with integrity; established suppliers; selected sporadic bad quality deliveries; hidden reduction of the quality of goods; market failure
Qualitätsunsicherheit als Ursache von Marktversagen: Anpassungsmechanismen und Regulierungsbedarf (Überarbeitete Fassung)
Get PDFThis revised version corrects minor errors in the mathematical equations of the previous version (MPRA Paper No. [126467]). The theoretical argument and main conclusions remain unchanged.
The paper examines quality uncertainty as a source of market failure and analyzes the resulting adjustment mechanisms and regulatory implications.
This dissertation analyzes market failure under quality uncertainty and develops the goodwill approach as an alternative to signalling models in information economics. The study focuses on the existence of irreversible entry costs that arise endogenously from informational frictions rather than from explicit expenditures such as advertising or introductory pricing.
The central idea is that new entrants in markets with incomplete consumer information cannot immediately sell their profit-maximizing output at the prevailing market price, because consumers initially lack sufficient trust in their product quality. As a result, newcomers must operate temporarily at higher average costs than established firms. Market entry therefore continues only as long as incumbent suppliers earn prices that at least compensate these initial cost disadvantages. In equilibrium, price premia for high-quality products persist even under free market entry.
These equilibrium premia provide the incentive for established firms to maintain product quality: as long as the present value of future price premia exceeds the potential short-term gain from hidden quality deterioration, quality will be sustained. Non-cost-covering introductory prices or advertising expenses are not essential components of the goodwill model but represent optional instruments to reduce the irreversible costs of market entry.
Beyond this theoretical contribution, the dissertation discusses the resulting implications for competition policy and regulation in markets characterized by persistent quality uncertainty
Variations on the Author
Get PDF“Variations on the Author” discusses two of Eduardo Coutinho’s recent films (Um Dia na Vida, from 2010, and Últimas Conversas, posthumously released in 2015) and their contribution to the general question of documentary authorship. The director’s filmography is characterized by a consistent yet self-effacing form of authorial self-inscription: Coutinho often features as an interviewer that rather than express opinions propels discourses; an interviewer that is good at listening. This mode of self-inscription characterizes him as an author who is not expressive but who is nonetheless markedly present on the screen. In Um Dia na Vida, however, Coutinho is completely absent form the image, while Últimas Conversas, on the contrary, includes a confessional prologue that moves the director from the margins to the center of his films. This article examines the ways in which these works stand out in the filmography of a director who offers new insights into the notion of cinematic authorship
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