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This document explores how firms subsidize product inspection costs to attract consumer attention in sequential search markets, establishing a subsidy-sorting principle where higher-quality firms offer larger subsidies. The study identifies a unique equilibrium where low-quality firms are ignored, intermediate types separate with increasing subsidies, and high-quality firms pool at full subsidies, maximizing information revelation and ensuring efficient inspection. Additionally, it discusses the implication
- Author
- thachdongquan1904
- Language
- EN