Noisy signaling in monopoly

Leonard Mirman, Egas Salgueiro () and Marc Santugini

International Review of Economics & Finance, 2014, vol. 29, issue C, 504-511

Abstract: We study the informational role of prices in a stochastic environment. We provide a closed-form solution of the monopoly problem when the price imperfectly signals quality to the uninformed buyers. We then study the effect of noise on output, market price, information flows, and expected profits. The presence of noise may reduce the informational externality due to asymmetric information, which increases the firm's expected profits.

Keywords: Learning; Monopoly; Noise; Rational expectations; Signaling (search for similar items in EconPapers)
JEL-codes: D21 D42 D82 D83 D84 L12 L15 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Working Paper: Noisy Signaling in Monopoly (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:29:y:2014:i:c:p:504-511

DOI: 10.1016/j.iref.2013.07.009

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