Information, Prices and Buyer Entry

Mei Dong, Janet Hua Jiang and Ling Sun

Staff Working Papers from Bank of Canada

Abstract: Conventional wisdom suggests that information transparency about prices lowers prices and markups by intensifying seller competition. However, in markets with costly buyer entry, price transparency also draws in more buyers, increasing demand-side competition and putting upward pressure on prices. We show that this buyer entry effect may dominate, and prices and markups may rise with information transparency.

Keywords: Models and tools; Economic models (search for similar items in EconPapers)
JEL-codes: D40 D83 L11 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2026-03
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Persistent link: https://EconPapers.repec.org/RePEc:bca:bocawp:26-4

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