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Information externalities in a model of sales

Martin Sefton and John Morgan

Economics Bulletin, 2001, vol. 4, issue 7, 1-5

Abstract: We anlayze Varian's (1980) Model of Sales, and show that when the number of uninformed consumers increases, prices become less competitive for all consumers. Thus, the influx of uninformed consumers generates a negative externality increasing the prices paid by informed consumers.

JEL-codes: D0 (search for similar items in EconPapers)
Date: 2001-07-18
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