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Credence goods – regulation and competition. David Stallibrass | Director, Services and Public Markets UCL / HKU Conference | March 2011. A credence spectrum. My job. Medical advice. Barristers. Education. Experience good. Credence good. Medical procedures. Home repairs. Audit.

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Credence goods regulation and competition

Credence goods – regulation and competition

David Stallibrass | Director, Services and Public Markets

UCL / HKU Conference | March 2011


A credence spectrum
A credence spectrum

My job

Medical

advice

Barristers

Education

Experience good

Credence good

Medical procedures

Home repairs

Audit

Vitamins

Primarily a consumerproblem:

Asymmetric information

Mitigated by

brand power

Dominance?

Mitigated by regulation

Protectionism?


Political economy
Political economy

Role of competition authority to represent those who do not exist yet


Three examples
Three examples

Focus of professional bodies is often on high entry barriers and raising standards  exacerbates competition problem


Information revolution
Information revolution

Alternative approach: mitigate underlying information asymmetry by actively supporting transparency and consumer feedback

3: Challenge firms and professionals to compete on quality and know their customer

1: Open up performance and complaints data

2: Commit not to make defamation claims

Often resisted by professional bodies

 evidence of losing their focus?

Consumers help each other to choose service provider right for them

Firms and professionals have incentive and knowledge to improve their offering



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