Practices (revised)

CIRPEE Working Paper No. 08-05 (revised)

34 Pages Posted: 21 May 2008 Last revised: 20 Sep 2012

See all articles by Max Blouin

Max Blouin

University of Quebec at Montreal (UQAM) - Department of Economics

Jean-Marc Bourgeon

French National Institute for Agricultural Research (INRA) - UMR Economie Publique; Ecole Polytechnique - Economic Department

Date Written: May 1, 2008

Abstract

We examine an economy where professionals provide services to clients and where a professional can sell his practice to another. Professionals vary in quality, and clients in their need (or willingness-to-pay) for high-quality service. Efficiency is measured as the number of matches between high-quality professionals and high-need clients. However, agent types are unobservable a priori. We find that trade in practices can facilitate the transmission of information about agent types. In general full efficiency is achieved, but equilibrium is not always robust to random shocks. A tax on the sale of practices ensures the existence of robust, efficient equilibria.

Keywords: Signaling, professional services, practices, reputation

JEL Classification: C73, D82

Suggested Citation

Blouin, Max and Bourgeon, Jean-Marc, Practices (revised) (May 1, 2008). CIRPEE Working Paper No. 08-05 (revised), Available at SSRN: https://ssrn.com/abstract=1135594 or http://dx.doi.org/10.2139/ssrn.1135594

Max Blouin (Contact Author)

University of Quebec at Montreal (UQAM) - Department of Economics ( email )

P.O. Box 8888, Downtown Station
Montreal, Quebec H3C 3P8
Canada

Jean-Marc Bourgeon

French National Institute for Agricultural Research (INRA) - UMR Economie Publique ( email )

Centre de Grignon
BP01
Thiverval-Grignon, 78850
France

Ecole Polytechnique - Economic Department ( email )

Palaiseau, 91128
France

HOME PAGE: http://www.polytechnique.edu

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