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.
Luini, L., Mangani, A. (2000). Vertical product differentiation and adverse selection: an experimental note. QUADERNI DEL DIPARTIMENTO DI ECONOMIA POLITICA(305).
Vertical product differentiation and adverse selection: an experimental note
LUINI, LUIGI;MANGANI, ANDREA
2000-01-01
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.
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https://hdl.handle.net/11365/34160
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