The Effects of Regulating Hidden Add-on Costs
نویسندگان
چکیده
We examine the welfare effects of price and disclosure regulation in a model where firms can shroud add-on costs, such as penalty fees for consumer financial products. Such regulation can increase or decrease welfare even when there are no direct costs. There are, however, strong complementarities between price controls and disclosure mandates: conditional on disclosure be ing mandated, price controls always (weakly) increase welfare, and conditional on prices being sufficiently constrained, disclosure mandates always (weakly) increase welfare.
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