The Social Value of Cost Information in a Monopolistically Competitive Economy

Andreas Szczutkowski

Journal of Public Economic Theory, 2010, vol. 12, issue 2, 345-362

Abstract: An economy with monopolistic competition is endowed with an information system that produces a public information signal correlated to uncertain costs of production. Investment in the monopolistic competition sector is determined by consumers' savings under uncertainty. Savings are always lower than their efficient levels in the presented economy. If consumers' preferences exhibit prudence, then an improvement of the underlying information system (in the sense of Blackwell 1953) leads to a decrease of expected savings. The social value of information may be negative in that case from an ex ante point of view. Better information may strengthen the market failure caused by imperfect competition. Without precautionary saving (negative prudence), the social value of information is always positive.

Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://doi.org/10.1111/j.1467-9779.2010.01454.x

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:jpbect:v:12:y:2010:i:2:p:345-362

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1097-3923

Access Statistics for this article

Journal of Public Economic Theory is currently edited by Rabah Amir, Gareth Myles and Myrna Wooders

More articles in Journal of Public Economic Theory from Association for Public Economic Theory Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().