The Effect Of Brand On Private Regulation Of Market

As the result of asymmetric information between sellers and buyers, issues such asincomplete information, adverse selection and moral hazard arise, which keep themarket from Pareto efficiency. In order to solve the issues brought by asymmetricinformation and increase the efficiency of resource allocation, government regulation isnecessary for economic behavior. However, government regulation is imperfect andincomplete, which can be supplemented or substituted by private regulation withinlimits to some degrees.Firstly, in this dissertation, papers on information economics and private regulationare summarized and the significance of private regulation is analyzed. Similarly, studieson government regulation are generalized and doubts on efficiency and rationality ofgovernment regulation are also raised.Secondly, private regulation in terms of brand is analyzed on the basis of previousstudy. The signaling model proposed by Spence is concretely extended in thisdissertation; as a signal, brand is involved in this model to study:(1) When can the enterprises of high-quality products and those of low-qualityproducts be distinguished by the level of brand;(2) When can the enterprises improve their level of brand and marketcompetitiveness by separating into monitors and followers;(3) In the pooling equilibrium, how brand works under asymmetric information.Then, factors that may lead to the difference of efficiency between governmentregulation and private regulation are discussed, which reach to the conclusion ofsuitable conditions for government regulation and private regulation respectively.Finally, suggestions on market supervision are proposed.