Autori: Marimon, Ramon , Nicolini, Juan Pablo , Teles, Pedro
Titolo: Competition and reputation!
Periodico: European University Institute of Badia Fiesolana (Fi). Department of Economics - Working papers
Anno: 1999 - Fascicolo: 18 - Pagina iniziale: 1 - Pagina finale: 31

In this paper we analyze thè interaction of two disciplinarv mechanisms: compe-tition and reputation. We first study a dynamic modeì of monopolistic corapetition with experienced goods (i.e., quality is observed after goods are purchased). When market power is high enough, reputation results in thè equilibrium with perfect in-formation being sustainable. If consumers' expectations satisfy a weak regularity condition, then there is a unique sequential equilibrium with quality goods being produced and thè price has a mark-up which is either thè full information monopolistic mark-up or, if this is not sustainable (e.g., when goods are very dose substi-tutes), thè rate of time preference, that acts as a reputation constraint. A variation of thè modeì ailows us to study thè private provisìon of currencies. In particular, we inquire whether Bertrand competition between profìt maximizing currency is-suers would drive inflation rates to thè efficient outcome, as suggested prominently by Hayek. We show that, unless firms can commit to future actions, thè efficient outcome is never attained. Without full commitment, equilibria with deflation -as implied by thè FViedman rule- can not be sustained, however, if currencies are dose substitutes (and beliefs regular) thè equilibrium inflation rate is zero.


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Testo completo: http://www.iue.it/ECO/WP-Texts/ECO99-18.pdf

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