Information externalities in a model of sales
AbstractWe anlayze Varian's (1980) Model of Sales, and show that when the number of uninformed consumers increases, prices become less competitive for all consumers. Thus, the influx of uninformed consumers generates a negative externality increasing the prices paid by informed consumers.
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Bibliographic InfoArticle provided by AccessEcon in its journal Economics Bulletin.
Volume (Year): 4 (2001)
Issue (Month): 7 ()
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- D0 - Microeconomics - - General
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"Price Dispersion in the Small and in the Large: Evidence from an Internet Price Comparison Site,"
2004-03, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
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