Many service relationships are characterised by informational asymmetries with service providers having better information concerning service quality than purchasers. Under such circumstances, signals may develop to transmit information between buyers and sellers. The mix of signals will depend upon particular market, product and firm characteristics. An empirical investigation of the estate agency industry shows that contingent contracts, trust building activities and market segmentation may support high quality, high price strategies within the context of asymmetric information.
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Bishop et al. (2002) studied this question.
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