Competitive Screening under Heterogeneous Information

Renato Gomes, Lucas Maestri and Daniel Garrett

No 10036, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We study competition in price-quality menus when consumers privately know their valuation for quality (type), and are heterogeneously informed about the offers available in the market. While firms are ex-ante identical, the menus offered in equilibrium are ordered so that more generous menus leave more surplus uniformly over types. More generous menus provide quality more efficiently, serve a larger range of consumers, and generate a greater fraction of profits from sales of low-quality goods. By varying the mass of competing firms, or the level of informational frictions, we span the entire spectrum of competitive intensity, from perfect competition to monopoly.

Keywords: Adverse selection; Competition; Heterogeneous information; Price discrimination; Screening (search for similar items in EconPapers)
JEL-codes: D82 (search for similar items in EconPapers)
Date: 2014-06
New Economics Papers: this item is included in nep-com, nep-cta and nep-mic
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Citations: View citations in EconPapers (5)

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Journal Article: Competitive Screening Under Heterogeneous Information (2019)
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