Vertical Product Differentiation and Adverse Selection: An Experimental Note
University of Siena Working Paper No. 305
25 Pages Posted: 5 Jan 2001
Date Written: October 2000
Abstract
In three identical laboratory markets, sellers possess products whose quality is both exogenously and endogenously determined. Buyers can observe products' quality only in the last session of each experiment. It is also assumed an uneven distribution of income among buyers. We study whether a separating equilibrium arises in such a context, as in traditional models of vertical product differentiation, thus reducing adverse selection outcomes.
Keywords: Asymmetric information, Product differentiation, Durable goods.
JEL Classification: C92, D82, D43
Suggested Citation: Suggested Citation
Luini, Luigi and Mangani, Andrea, Vertical Product Differentiation and Adverse Selection: An Experimental Note (October 2000). University of Siena Working Paper No. 305, Available at SSRN: https://ssrn.com/abstract=255458 or http://dx.doi.org/10.2139/ssrn.255458
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