Searching for service
- Author(s)
- Maarten Janssen, T. Tony Ke
- Abstract
Since Telser (1960), there is a well-established argument that a competitive market will not provide service due to freeriding. We show that with search frictions, the market may well provide service if the cost of doing so is not too large. Any market equilibrium with service provision has two or more firms providing service, implying overprovision of service as the social optimum mandates at most one service provider Firms that provide service and those that do not can coexist, where consumers direct their search to service providers first to obtain service, and to nonservice providers later to enjoy lower prices.
- Organisation(s)
- Department of Economics
- External organisation(s)
- Massachusetts Institute of Technology
- Journal
- American Economic Journal: Microeconomics
- Volume
- 12
- Pages
- 188-219
- No. of pages
- 32
- ISSN
- 1945-7669
- DOI
- https://doi.org/10.1257/mic.20180315
- Publication date
- 2019
- Peer reviewed
- Yes
- Austrian Fields of Science 2012
- 502013 Industrial economics, 502021 Microeconomics
- Keywords
- ASJC Scopus subject areas
- Economics, Econometrics and Finance(all)
- Portal url
- https://ucris.univie.ac.at/portal/en/publications/searching-for-service(d2e7651a-965d-4376-ad02-a66d0db01105).html