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Title: Practices
Authors: Blouin, Max
Bourgeon, Jean-Marc
Keywords: Signaling
Professional Services
Issue Date: 2008-05
Series/Report no.: Cahiers du CIRPÉE;08-05
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.
Appears in Collections:Cahiers de recherche du CIRPÉE

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