Horizontal Product Differentiation: Disclosure and Competition
AbstractThe unraveling argument says that when a rm may produce di erent qualities and quality is unknown to consumers, the rm has an incentive to disclose the private information as in any pool of rms there is a best quality rm and this rm has an incentive to disclose. Recent literature has established that this argument does not carry over to an environment where the product is not vertically, but horizontally di erentiated. This paper argues that with horizontally di erentiated products, competition restores the unraveling argument. In a duopoly market we show that all equilibria of the disclosure game have rms fully disclosing the variety they produce.
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Bibliographic InfoPaper provided by University of Vienna, Department of Economics in its series Vienna Economics Papers with number 1205.
Date of creation: Jul 2012
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Find related papers by JEL classification:
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- M37 - Business Administration and Business Economics; Marketing; Accounting - - Marketing and Advertising - - - Advertising
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-10-20 (All new papers)
- NEP-COM-2012-10-20 (Industrial Competition)
- NEP-CTA-2012-10-20 (Contract Theory & Applications)
- NEP-IND-2012-10-20 (Industrial Organization)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Janssen, Maarten C.W. & Roy, Santanu, 2010.
"Signaling quality through prices in an oligopoly,"
Games and Economic Behavior,
Elsevier, vol. 68(1), pages 192-207, January.
- Maarten C.W. Janssen & Santanu Roy, 2007. "Signaling Quality Through Prices in an Oligopoly," Departmental Working Papers 0709, Southern Methodist University, Department of Economics, revised Nov 2008.
- Maarten C.W. Janssen & Santanu Roy, 2007. "Signaling Quality through Prices in an Oligopoly," Tinbergen Institute Discussion Papers 07-081/1, Tinbergen Institute.
- Simon P. Anderson & Régis Renault, 2009.
"Comparative advertising: disclosing horizontal match information,"
RAND Journal of Economics,
RAND Corporation, vol. 40(3), pages 558-581.
- Simon P. ANDERSON & Régis RENAULT, 2008. "Comparative Advertising: disclosing horizontal match information," THEMA Working Papers 2008-29, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
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