THE EFFECT OF GROUP SIZE AND ASYMMETRIES ON THE INCENTIVE TO REVEAL GROUP‐SPECIFIC INFORMATION*

David Reiffen

Journal of Industrial Economics, 2007, vol. 55, issue 4, 739-769

Abstract: In this paper, I examine how firms' incentives to differentiate their products through the revelation of truthful information about product attributes varies with the distribution of consumer preferences for those attributes. I show that information will tend to be provided for large groups, even absent scale economies in producing that information. In addition, the relative sizes of the groups whose estimates of product quality change positively vs. negatively (i.e., the degree of asymmetry) by the information is likewise an important determinant of its profitability.

Date: 2007
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https://doi.org/10.1111/j.1467-6451.2007.00328.x

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