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| Xiaopeng Xu |
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| ''Quality over-provision of information goods'' |
| ( 2002, Vol. 12 No.5 ) |
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| This paper studies a producer's quality choice of an information good. The marginal cost of quality provision for the good is decreasing. The buyer does not observe the actual quality but can learn a signal which is the sum of quality and a noise. It shows that the producer has an incentive to over-supply quality. Moreover, and interestly, all types of producer may over-supply quality. |
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| Keywords: Information goods |
JEL: L1 - Market Structure, Firm Strategy, and Market Performance: General
D8 - Information, Knowledge, and Uncertainty: General |
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| Manuscript Received : Mar 07 2002 | | Manuscript Accepted : Mar 08 2002 |
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