Firm-specific information, product differentiation, and industry equilibrium
AbstractWhere consumers have imperfect information about specific firms' prices and lack information about the market, firms have informational market power. In general, improving the consumer's information about each firm's price will not necessarily lower average market price. We show, however, that certain types of improvements will lower price. Moreover, a reduction in barriers to entry (e.g., capital costs) will lower price-holding information constant. Where a significant number (but not all) consumers have perfect information, single-price equilibria are impossible.
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Bibliographic InfoPaper provided by Department of Agricultural & Resource Economics, UC Berkeley in its series Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series with number qt60v9q47r.
Date of creation: 01 Mar 1985
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competition; consumers; consumers' preferences; consumer education; mathematical models; demand elasticity; economics; equilibrium; marketing;
Other versions of this item:
- Perloff, Jeffrey M & Salop, Steven C, 1986. "Firm-Specific Information, Product Differentiation, and Industry Equilibrium," Oxford Economic Papers, Oxford University Press, vol. 38(0), pages 184-202, Suppl. No.
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- Carlton, Dennis W. & Perloff, Jeffrey M., 1989.
"The Economics of Information,"
25156, University of Connecticut, Food Marketing Policy Center.
- Kathy Baylis & Jeffrey Perloff, 2002.
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- Baylis, Kathy & Perloff, Jeffrey M., 2001. "Price Dispersion on the Internet: Good Firms and Bad Firms," Institute for Research on Labor and Employment, Working Paper Series qt2t0770rn, Institute of Industrial Relations, UC Berkeley.
- Thomas A Abbott Iii, 1989. "Price Dispersion in U.S. Manufacturing," Working Papers 89-7, Center for Economic Studies, U.S. Census Bureau.
- Thomas A Abbott III, 1992. "Price Dispersion In U.S. Manufacturing: Implications For The Aggregation Of Products And Firms," Working Papers 92-3, Center for Economic Studies, U.S. Census Bureau.
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