Abstract

http://ssrn.com/abstract=226238
 
 

Citations (6)



 


 



Effects of Information Provision in an Vertically Differentiated Market


Tasneem Chipty


Ohio State University

Ann Dryden Witte


Wellesley College - Department of Economics; National Bureau of Economic Research (NBER)

April 1998

NBER Working Paper No. w6493

Abstract:     
We study the effects of consumer information on equlibrium market prices and observable product quality in the market for child care. Child care markets offer a unique opportunity to study these effects because of the existence of resource and referral agencies (R&Rs) in some markets. R&Rs provide consumers with information on availability, price, and observable characteristics of care. To understand the effects of information provision in markets like child care, we examine the effects of information provision in a model of vertical differentiation. We show conditions in which increased consumer information reduces price dispersion, maximum price, and average price. With this model we examine empirically the effects of R&Rs on the distribution of child care prices and on the distribution of staff-child ratios. We estimate separate models for the distribution of prices and staff-child ratios for infants, toddlers, preschoolers and school age children because of regulatory and care differences across age groups. We find that R&Rs have economically large and statistically significant effects on the distribution of prices for the care infants and toddlers. Geographic markets with R&Rs have significantly less price dispersion and lower maximum prices. There is also some evidence that markets with R&Rs have lower average prices.Information provision via R&Rs has no significant effects on staff-child ratios. These findings are generally consistent with search theory and support the contention that information provision can intensify price competition.

Number of Pages in PDF File: 37

working papers series


Download This Paper

Date posted: August 26, 2000  

Suggested Citation

Chipty, Tasneem and Witte, Ann Dryden, Effects of Information Provision in an Vertically Differentiated Market (April 1998). NBER Working Paper No. w6493. Available at SSRN: http://ssrn.com/abstract=226238

Contact Information

Tasneem Chipty (Contact Author)
Ohio State University ( email )
410 Arps Hall
Columbus, OH 43210-1172
United States
614-292-2051 (Phone)
614-292-3906 (Fax)
Ann Dryden Witte
Wellesley College - Department of Economics ( email )
106 Central Street
Wellesley, MA 02181
United States
781-283-2163 (Phone)
781-283-2177 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Feedback to SSRN


Paper statistics
Abstract Views: 531
Downloads: 23
Citations:  6

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo7 in 0.203 seconds