The Demand for Tests

Liebi, Thomas (May 2003). The Demand for Tests (Diskussionsschriften 03-07). Bern: Universität Bern Volkswirtschaftliches Institut

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Many consumption goods have inherent attributes that are unknown to both consumers and producers of the good. This is reflected for example by the current discussion about potential harms of food products containing genetically modified organisms. The underlying paper analyzes consumers’ demand for product tests in a surrounding of symmetric but imperfect information. It is shown that the demand for information of existing customers is higher than that of potential new ones. In addition, the introduction of an information market unambiguously lowers the product price. This is true, even though expected positive or negative quality news is symmetric in terms of monetary
valuation.

Item Type:

Working Paper

Division/Institute:

03 Faculty of Business, Economics and Social Sciences > Department of Economics
03 Faculty of Business, Economics and Social Sciences > Department of Economics > Institute of Economics > Economic Theory

UniBE Contributor:

Liebi, Thomas

Subjects:

300 Social sciences, sociology & anthropology > 330 Economics

Series:

Diskussionsschriften

Publisher:

Universität Bern Volkswirtschaftliches Institut

Language:

English

Submitter:

Aline Lehnherr

Date Deposited:

11 Jun 2020 17:05

Last Modified:

06 Aug 2020 14:18

JEL Classification:

L15, D82, D11

BORIS DOI:

10.7892/boris.144075

URI:

https://boris.unibe.ch/id/eprint/144075

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