Yat Fung Wong

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Job Market Papers

My job market portfolio consists of two separate papers, which intend to investigate market competition between firms operating under different business models. They extend the Wolinsky's (1986) monopolistic competition model with consumer search to investigate firms' incentives to form a referral alliance and to invest effort in serving customers. Please refer to my first and second working papers for the details.

Working Papers

[1]  Referral Alliance and Consumer Search   (Job Market Paper)

This paper concerns the formation of referral alliances among multidiscipline firms in the same industry. We show that firms inside a referral alliance always earn higher profit than those outside. Moreover, the emergency of more referral alliances would enhance competition forcing down price. Therefore, the increase in popularity of referral alliances benefits consumers but not necessarily firms. Additionally, we provide some rationals for the phenomena that referral alliances are more common in professional service industry, in which there are high search costs, highly uncertain product and large corporations managing to provide most kinds of services. The results are also consistent with the observation that there is an increasing unmber of referral network for firms in law and accounting industries during the information age with the reduction in cost of maintaining the alliance.

[2]  Sales Agent Compensation Scheme and Consumer Search   (Job Market Paper)

This paper concerns the incentives for firms to invest effort in serving customers if effort is costly and might be merely persuasive. We assume that commissions are the only way to motivate sales agents, whose advices could be indeed useful increasing clients' willingness to pay or merely persuasive without affecting it. Under the assumption, we show that sophisticated consumers sort into fixed wage and commission based stores according to their levels of impressionability. The comparative static analysis shows that the decrease in effectiveness of sales agents' advice always increases the number of the fixed wage firms, but the decrease in search cost has the same effect only when sales agents' advice is relatively ineffective. Since the wide usage of the Internet dramatically reduces search cost and increases the information available to consumers, sales agents' ability to enhance the consumers' willingness to pay is weaken. Therefore, both search cost and effectiveness of sales agents' advice have decreased, so our results predict that some firms might find it profitable to announce their switching the compensation scheme to fixed wage during the information age.

[3]  Warehouse Expansions and Countercyclical Markups 



[1] " Optimism and Bargaining Inefficiency ", with Duozhe Li The B.E. Journal of Theoretical Economics, Vol. 9, No. 1,Topics 12, 2009. 


Work in Progress

[1] " Cooperation in General Common Agency ", with Toshiyuki Hirai and Chiu Yu Ko