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Practices

Author

Listed:
  • Max Blouin

    (UQAM - Université du Québec à Montréal = University of Québec in Montréal)

  • Jean-Marc Bourgeon

    (X-DEP-ECO - Département d'Économie de l'École Polytechnique - X - École polytechnique - IP Paris - Institut Polytechnique de Paris, INRA - Institut National de la Recherche Agronomique)

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; sometimes full efficiency is achieved. In cases where it is not, a tax on the sale of practices (based on the seller's age) can be used to achieve full efficiency. In addition, a ceiling on the price of services can be used to adjust the distribution of surplus between clients and professionals, while preserving efficiency.

Suggested Citation

  • Max Blouin & Jean-Marc Bourgeon, 2008. "Practices," Working Papers hal-00360512, HAL.
    • Handle: RePEc:hal:wpaper:hal-00360512
    Note: View the original document on HAL open archive server: https://hal.science/hal-00360512
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    References listed on IDEAS

    as
    1. Steven Tadelis, 1999. "What's in a Name? Reputation as a Tradeable Asset," American Economic Review, American Economic Association, vol. 89(3), pages 548-563, June.
    2. George J. Mailath & Larry Samuelson, 2001. "Who Wants a Good Reputation?," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 68(2), pages 415-441.
    3. Luis Garicano & Tano Santos, 2004. "Referrals," American Economic Review, American Economic Association, vol. 94(3), pages 499-525, June.
    4. Hendrik Hakenes & Martin Peitz, 2007. "Observable Reputation Trading," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(2), pages 693-730, May.
    5. Steven Tadelis, 2002. "The Market for Reputations as an Incentive Mechanism," Journal of Political Economy, University of Chicago Press, vol. 110(4), pages 854-882, August.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    signaling; professional services; practices; goodwill;
    All these keywords.

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