New Economics Papers
on Law and Economics
Issue of 2011‒11‒28
one paper chosen by
Jeong-Joon Lee, Towson University

  1. Reputation on a credence good market: an economic analysis of professional self-regulation By Camille Chaserant; Sophie Harnay

  1. By: Camille Chaserant; Sophie Harnay
    Abstract: This article provides a rationalization of (at least partial) professional self-regulation resting on the joint production of individual and collective reputations and its impact on the quality of professional services. It presents a short model that aims to show that (i) a high-quality steady-state exists in a market for a credence goods and that (ii) the likelihood of high quality increases when the market is self-regulated by the profession in comparison to the situation where there is no self-regulation. The law and economics literature usually criticizes self-regulation as a modern form of corporatism; we show that it may help to regulate quality when clients are faced with opportunistic professionals.
    Keywords: professional services, credence goods, self-regulation, individual reputation, collective reputation
    JEL: K4 L14 L15 L43 L84 D8
    Date: 2011

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