The Impact of Mandatory Disclosure on Information Acquisition: Theory and Experiment
AbstractThis study experimentally investigates the interaction between firmfs information acquisition choice and mandatory disclosure in the presence of proprietary costs. The results demonstrate that mandatory disclosure diminishes firmfs incentive to acquire industry-wide demand information when information acquisition is costly and endogenous. Further, I also show that firmfs production decision is improved by acquiring information. Taken together, although acquiring information improves firmfs production decision, mandatory disclosure diminishes firmfs incentive to do so, and thus, deteriorates firmfs information environment. This leads to inefficient production, which in turn, might have a substantial impact on market outcomes.
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Bibliographic InfoPaper provided by Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) in its series Discussion Papers in Economics and Business with number 13-01.
Length: 31 pages
Date of creation: Feb 2013
Date of revision:
Information Acquisition; Mandatory Disclosure; Duopoly; Proprietary Cost; Experiment;
Find related papers by JEL classification:
- M41 - Business Administration and Business Economics; Marketing; Accounting - - Accounting - - - Accounting
- M48 - Business Administration and Business Economics; Marketing; Accounting - - Accounting - - - Government Policy and Regulation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-02-16 (All new papers)
- NEP-CDM-2013-02-16 (Collective Decision-Making)
- NEP-CTA-2013-02-16 (Contract Theory & Applications)
- NEP-EXP-2013-02-16 (Experimental Economics)
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