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THE THEORY OF WARRANTY CONTRACTS |
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| Authors: | Winand Emons |
| Institution: | University of Basel |
| Abstract: | Abstract. This paper surveys theories of the existence and design of warranty contracts. Insurance, signalling, and incentive motives are used to explain the existence of warranties. The incorporation of imperfections that prevent warranties from serving their basic purposes in a first-best way describes actual warranty practices. |
| Keywords: | warranties insurance signalling incentives marketing |