Universität zu Köln

Farukh, Razi (2022). Essays on Credence Goods with Applications to Health Care and News Markets. PhD thesis, Universität zu Köln.

Preview

PDF Diss_RaziFarukh_EconCredenceGoods.pdf Download (8MB) | Preview

Abstract

Motivated by the economics of credence goods, this thesis advances our understanding of the economic analysis of health care and media markets. Despite fundamental differences in purpose and nature, health care and media markets share – from an economic theory perspective – a number of important commonalities. In both markets, qualified experts provide a service (treatment, news content) to their consumers (patients, audience), who are often unable to verify the service quality on their own and therefore have to rely largely on their experts’ behavior. The thesis builds on three separate research papers. The second chapter presents a novel, efficiency-based rationale for the widespread use of price and entry regulatory policies in many real-world credence goods markets. It analyzes a credence goods market where experts have social preferences and many consumers share one common expert. It shows that, if market entry of experts is endogenous, price regulation should be accompanied by entry restrictions to realize efficiency gains. The third chapter develops a novel approach to measuring attitudes of news outlets towards migration and polarization in a news market. It analyzes a unique dataset consisting of news pictures that news outlets published in their news stories on migration during the 2015-16 migration crisis in Germany. To put these news pictures into a natural perspective, pictures from ideological campaigns -- that are strongly engaged in favor of or against immigration – have been also investigated. It finds that news outlets exploit less than 50 percent of the differentiation that is used by ideological campaigns. Apart from one tabloid news outlet, it finds that news outlets maintain their relative position over time even when public sentiment about migration shifted strongly. The fourth chapter introduces a more holistic measure to evaluate a news outlet’s attitude towards migration and polarization in the market for news. Human coders from a large-scale, representative survey evaluated a large sample of pictures from Chapter 3 with respect to their degree of positivity/negativity. It finds that news outlets use approximately 60 percent of the differentiation of ideological campaigns. Again, with the exception of one tabloid outlet, it finds that news outlets maintain their relative position over time even when public sentiment about migration shifted strongly.