1. How consumer information curtails market power in the funeral industry
- Author
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Christian Montet, Thierry Blayac, Patrice Bougette, Laboratoire Montpelliérain d'Économie Théorique et Appliquée (LAMETA), Université Montpellier 1 (UM1)-Université Paul-Valéry - Montpellier 3 (UM3)-Institut National de la Recherche Agronomique (INRA)-Centre international d'études supérieures en sciences agronomiques (Montpellier SupAgro)-Université de Montpellier (UM)-Centre National de la Recherche Scientifique (CNRS)-Institut national d’études supérieures agronomiques de Montpellier (Montpellier SupAgro), Groupe de Recherche en Droit, Economie et Gestion (GREDEG), Centre National de la Recherche Scientifique (CNRS)-Université Nice Sophia Antipolis (... - 2019) (UNS), Université Côte d'Azur (UCA)-Université Côte d'Azur (UCA), SRM, Université Nice Sophia Antipolis (... - 2019) (UNS), COMUE Université Côte d'Azur (2015-2019) (COMUE UCA)-COMUE Université Côte d'Azur (2015-2019) (COMUE UCA)-Centre National de la Recherche Scientifique (CNRS)-Université Côte d'Azur (UCA), Université Montpellier 1 (UM1)-Université Paul-Valéry - Montpellier 3 (UPVM)-Institut National de la Recherche Agronomique (INRA)-Centre international d'études supérieures en sciences agronomiques (Montpellier SupAgro)-Université de Montpellier (UM)-Centre National de la Recherche Scientifique (CNRS)-Institut national d’études supérieures agronomiques de Montpellier (Montpellier SupAgro), Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement (Institut Agro)-Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement (Institut Agro), and Université Côte d'Azur (UCA)-Université Côte d'Azur (UCA)-Centre National de la Recherche Scientifique (CNRS)
- Subjects
Economics and Econometrics ,media_common.quotation_subject ,JEL: L - Industrial Organization/L.L4 - Antitrust Issues and Policies/L.L4.L43 - Legal Monopolies and Regulation or Deregulation ,Commercial law ,Relative price ,Deregulation ,Microeconomics ,Market power ,Perception ,Consumer information ,0502 economics and business ,Economics ,050207 economics ,Business and International Management ,Consumer behaviour ,media_common ,Service (business) ,Discrete choice ,05 social sciences ,JEL: K - Law and Economics/K.K2 - Regulation and Business Law/K.K2.K23 - Regulated Industries and Administrative Law ,[SHS.ECO]Humanities and Social Sciences/Economics and Finance ,Funeral industry ,Discrete choice model ,Local competition ,JEL: D - Microeconomics/D.D1 - Household Behavior and Family Economics/D.D1.D12 - Consumer Economics: Empirical Analysis ,Commerce ,Service (economics) ,050211 marketing ,Business ,Law ,JEL: C - Mathematical and Quantitative Methods/C.C2 - Single Equation Models • Single Variables/C.C2.C25 - Discrete Regression and Qualitative Choice Models • Discrete Regressors • Proportions • Probabilities ,Public finance - Abstract
The purpose of this article is to show, based on the case of the French market, that consumer perception of different funeral service offers, along with new entry in a special storing facility service (“chambre funéraire”), can be sufficient to impose competitive pressures on the various suppliers, including the former monopolist. With a discrete choice experiment implemented in Lyon, France, we find evidence that, contrary to widely shared beliefs about this specific market, demand for funeral services seems characterized by relatively high price elasticities, at least as soon as consumers are fully informed about the opportunities open to them in this market. Consumer behavior has actually changed in favor of a better assessment of the different possibilities of services supplied and of their relative price. We then implement simulations in local markets and show that, with good consumer information, the market power of the supposedly dominant firm is much less important than it is generally believed. Furthermore, simulations stress the procompetitive effects of setting up a new storing facility by any businesses. We finally show that, if some improvements can still be brought to the functioning of this market, they should come from a better regulation of consumer information and of the entry of firms.
- Published
- 2012
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