A More General Framework to Analyze Whether Voluntary Disclosure is Insufficient or Excessive

Levent Celik

Review of Industrial Organization, 2014, vol. 44, issue 2, 178 pages

Abstract: I analyze if the excessive quality disclosure finding of the “classical literature” extends to environments in which consumers have a downward-sloping demand. While the answer is affirmative, there are at least two situations under which disclosure is socially insufficient: (1) when there are quality levels that are too low to generate any positive demand; and (2) when the prior beliefs place sufficiently higher weight on lower qualities. In both cases, non-disclosure by the seller leads to a severe reduction in the perceived quality, thereby significantly lowering the demand and the quantity consumed. Copyright Springer Science+Business Media New York 2014

Keywords: Monopoly; Quality uncertainty; Verifiable information disclosure; D82; D83; L12; L15 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s11151-013-9409-5

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