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- Title
Information revelation in competitive markets.
- Authors
Ivanov, Maxim
- Abstract
This paper analyzes a market with multiple sellers and horizontally differentiated products. We investigate the sellers' incentives to reveal product relevant information that affects the buyer's private valuation. The main finding is that if the number of sellers is sufficiently large, there is a unique symmetric equilibrium with full information disclosure. Thus, unlike the results by Lewis and Sappington (Int Econ Rev 35:309-327, ) and Johnson and Myatt (Am Econ Rev 93:756-784, ) for monopoly, which state that the monopolist reveals either full information or no information, intense competition results in a single extreme with respect to information disclosure. We show that the market is always inefficient, but the magnitude of inefficiency converges to zero at a high rate as competition intensifies.
- Subjects
ECONOMIC competition; MARKETS; DEALERS (Retail trade); INFORMATION theory; ECONOMIC equilibrium; CONSUMER goods
- Publication
Economic Theory, 2013, Vol 52, Issue 1, p337
- ISSN
0938-2259
- Publication type
Article
- DOI
10.1007/s00199-011-0629-3