Contained in this extension, i investigation the brand new feeling from even more battle from the NAS sector into the results of NAS limitations and auditor 2’s audit top quality. To have brevity, we do not create passion comparisons and focus to your impression out of NAS constraints on the auditor 2’s audit top quality.
To begin with, assume that there’s two NAS competition regarding the NAS sector: associate step 1 and you may agent 2. If you have undifferentiated Bertrand competition, NAS charges was whatever the NAS restrictions. Thus, as opposed to differentiation regarding the NAS industry, there’s no correspondence between your review markets and also the NAS industry. I ergo expose NAS market differentiation in 2 different ways. Earliest, i believe that each other auditor 2 and consultant 2 features a great aggressive advantage regarding NAS industry (instead, you to definitely associate step one have a competitive downside). Second, we think that only auditor 2 has an aggressive advantage when you look at the the newest NAS business. Such as the newest baseline design, i assume that the latest NAS really worth is not all that highest to help you rule out the truth where consumer enterprises prefer auditors to help you save on NAS fees (see the datingranking.net/guatemalan-chat-room inequalities in (An effective.20) and you will (A great.21) regarding evidences regarding Suggestion 5 and Offer 6).
4.dos.step 1 Competitive Advantage to have Auditor dos and you may an NAS Opponent
We believe that the worth of NAS getting customer organization is if the NAS are given by the associate step 1, assuming NAS are offered from the representative 2 otherwise auditor 2, with capturing high quality distinction on the NAS industry. Continue reading In the main text, we assume to have convenience you to definitely auditor dos only has you to competition throughout the NAS industry