Consumer protection and the incentive to become informed

Mark Armstrong (), John Vickers () and Jidong Zhou ()

Open Access publications from University College London from University College London

Abstract: We discuss the impact of consumer protection policies on consumers' incentives to become informed of the best deals available in the market. In a market with costly information acquisition, we find that imposing a cap on suppliers' prices reduces the incentive to become informed of market conditions, with the result that prices paid by consumers (both informed and uninformed) may rise. In a related model where consumers have the ability to refuse to receive marketing, we find that this ability softens price competition and can make all consumers worse off.

Date: 2009-04
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Published in Journal of the European Economic Association (2009-04) v.7, p.399-410

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http://discovery.ucl.ac.uk/17509/1/17509.pdf (application/pdf)

Related works:
Journal Article: Consumer Protection and the Incentive to Become Informed (2009)
Working Paper: Consumer protection and the incentive to become informed (2008)
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Persistent link: http://EconPapers.repec.org/RePEc:ner:ucllon:http://discovery.ucl.ac.uk/17509/

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