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Consumer salience and quality provision in (un)regulated public service markets

Gu, Y., Rasch, A. ORCID: https://orcid.org/0000-0001-9017-1898 and Wenzel, T. (2022) Consumer salience and quality provision in (un)regulated public service markets. Regional science and urban economics, 93. 103754. ISSN 0166-0462

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To link to this item DOI: 10.1016/j.regsciurbeco.2021.103754

Abstract/Summary

This article examines the impacts of publishing quality indicators in publicly financed service markets, such as education and healthcare markets. We set up a model in which the reporting of such indicators increases consumers’ decision weight on quality relative to other attributes (prices and horizontal match), affecting the competition between service providers. We use the model to study the effects in two market environments: markets with regulated prices and markets with unregulated prices. We find that the publication of quality indicators increases quality investments by service providers, but also increases prices and reduces variety. Consumer and total welfare can decrease with such policies, particularly when consumers are heavily subsidised.

Item Type:Article
Refereed:Yes
Divisions:Henley Business School > Real Estate and Planning
ID Code:108165
Publisher:Elsevier

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