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A More General Framework to Analyze Whether Voluntary Disclosure is Insufficient or Excessive

Celik, L. ORCID: 0000-0002-7668-6358 (2014). A More General Framework to Analyze Whether Voluntary Disclosure is Insufficient or Excessive. Review of Industrial Organization, 44(2), pp. 161-178. doi: 10.1007/s11151-013-9409-5

Abstract

I analyze if the excessive quality disclosure finding of the “classical literature” extends to environments in which consumers have a downward-sloping demand. While the answer is affirmative, there are at least two situations under which disclosure is socially insufficient: (1) when there are quality levels that are too low to generate any positive demand; and (2) when the prior beliefs place sufficiently higher weight on lower qualities. In both cases, non-disclosure by the seller leads to a severe reduction in the perceived quality, thereby significantly lowering the demand and the quantity consumed.

Publication Type: Article
Additional Information: This is a post-peer-review, pre-copyedit version of an article published in Review of Industrial Organization. The final authenticated version is available online at: http://dx.doi.org/10.1007/s11151-013-9409-5.
Publisher Keywords: Monopoly, Quality uncertainty, Verifiable information disclosure
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HF Commerce
Departments: School of Arts & Social Sciences > Economics
Date Deposited: 20 Jan 2020 12:31
URI: https://openaccess.city.ac.uk/id/eprint/23495
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