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Consumer myopia, competition and the incentives to unshroud add-on information

  • Wenzel, Tobias

This paper studies unshrouding decisions in a framework similar to Gabaix and Laibson (2006), but considers an alternative unshrouding mechanism where the impact of advertising add-on information depends on the number of unshrouding firms. We show that shrouding becomes less prevalent as the number of competing firms increases. With unshrouding costs a non-monotonic relationship between the number of firms and unshrouding may arise.

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Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 98 (2014)
Issue (Month): C ()
Pages: 89-96

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Handle: RePEc:eee:jeborg:v:98:y:2014:i:c:p:89-96
Contact details of provider: Web page: http://www.elsevier.com/locate/jebo

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  1. Kosfeld, Michael & Schüwer, Ulrich, 2011. "Add-on Pricing, Naive Consumers, and the Hidden Welfare Costs of Education," IZA Discussion Papers 6061, Institute for the Study of Labor (IZA).
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