How Consumer Information Curtails Market Power in the Funeral Industry

LAMETA Working Paper 2012-12

34 Pages Posted: 9 May 2012 Last revised: 23 Jul 2014

See all articles by Thierry Blayac

Thierry Blayac

Université Montpellier

Patrice Bougette

Université Côte d'Azur, CNRS, GREDEG

Christian Montet

Université de Polynésie Française, GDI - LAMETA/Université Montpellier 1 Research Associate

Date Written: April 1, 2012

Abstract

The purpose of this article is to show, based on the case of the French market, that consumer perception of different funeral service offers can be sufficient to impose competitive pressures on the various suppliers, including the former monopolist. With a discrete choice experiment implemented in Lyon, France, we find evidence that, contrary to widely shared beliefs about this specific market, demand for funeral services seems characterized by relatively high price elasticities, at least as soon as consumers are fully informed about the opportunities open to them in this market. Consumer behavior has actually changed in favor of a better assessment of the different possibilities of services supplied and of their relative price. We then implement simulations in local markets and show that, with good consumer information, the market power of the supposedly dominant firm is much less important than it is generally believed. Furthermore, simulations stress the procompetitive effects of setting up a new storing facility by any businesses. We finally show that, if some improvements can still be brought to the functioning of this market, they should come from a better regulation of consumer information and of the entry of firms.

Keywords: Funeral industry, Deregulation, Local competition, Market Power, Discrete choice models

JEL Classification: C25, D12, K23, L43

Suggested Citation

Blayac, Thierry and Bougette, Patrice and Montet, Christian, How Consumer Information Curtails Market Power in the Funeral Industry (April 1, 2012). LAMETA Working Paper 2012-12, Available at SSRN: https://ssrn.com/abstract=2054792 or http://dx.doi.org/10.2139/ssrn.2054792

Thierry Blayac (Contact Author)

Université Montpellier ( email )

Montpellier, 34099
France

Patrice Bougette

Université Côte d'Azur, CNRS, GREDEG ( email )

GREDEG CNRS
250, rue Albert Einstein
Valbonne, 06560
France

HOME PAGE: http://https://sites.google.com/site/patricebougette/Home

Christian Montet

Université de Polynésie Française, GDI - LAMETA/Université Montpellier 1 Research Associate ( email )

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