Information externalities in a model of sales
We 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.
Volume (Year): 4 (2001)
Issue (Month): 7 ()
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- Michael R. Baye & John Morgan & Patrick Scholten, 2004.
"Price Dispersion In The Small And In The Large: Evidence From An Internet Price Comparison Site,"
Journal of Industrial Economics,
Wiley Blackwell, vol. 52(4), pages 463-496, December.
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