Imperfect Information and the Equitability of Competitive Prices

Richard Schmalensee

The Quarterly Journal of Economics, 1984, vol. 99, issue 3, 441-460

Abstract: In many markets, sellers have imperfect information about the costs of sales to different buyers, and the pattern of competitive pricing depends on the information available. In order to analyze the equity implications of public policies requiring information suppression, non-utilitarian measures of the horizontal and vertical dimensions of pricing inequity caused by cross-subsidization are proposed and examined. Better information generally reduces vertical inequity, but if information about buyers is initially poor, additional imperfect information may increase horizontal inequity. If information is initially good, more information generally lowers both dimensions of inequity.

Date: 1984
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