Quality Disclosure and Competition
نویسندگان
چکیده
We analyze costly quality disclosure with horizontally differentiated products under duopoly and monopoly, and characterize the effect of competition on disclosure and welfare. We show that expected disclosure is higher under monopoly than under duopoly, and the welfare comparison depends on the level of disclosure cost: when the disclosure cost is low, welfare is higher under monopoly than duopoly, but when the disclosure cost is high (but not so high as to eliminate disclosure), welfare is higher under duopoly. In either market structure, disclosure is excessive in terms of total surplus, but insufficient in terms of consumer surplus.
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