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A More General Framework to Analyze Whether Voluntary Disclosure is Insufficient or Excessive

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  • Levent Celik

Abstract

I analyze if the excessive quality disclosure finding of the “classical literature” extends to environments in which consumers have a downward-sloping demand. While the answer is affirmative, there are at least two situations under which disclosure is socially insufficient: (1) when there are quality levels that are too low to generate any positive demand; and (2) when the prior beliefs place sufficiently higher weight on lower qualities. In both cases, non-disclosure by the seller leads to a severe reduction in the perceived quality, thereby significantly lowering the demand and the quantity consumed. Copyright Springer Science+Business Media New York 2014

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  • Levent Celik, 2014. "A More General Framework to Analyze Whether Voluntary Disclosure is Insufficient or Excessive," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 44(2), pages 161-178, March.
    • Handle: RePEc:kap:revind:v:44:y:2014:i:2:p:161-178
    DOI: 10.1007/s11151-013-9409-5
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    References listed on IDEAS

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    Cited by:

    1. Levent Celik, 2014. "Information Unraveling Revisited: Disclosure of Horizontal Attributes," Journal of Industrial Economics, Wiley Blackwell, vol. 62(1), pages 113-136, March.
    2. Andrew Rhodes & Chris M. Wilson, 2018. "False advertising," RAND Journal of Economics, RAND Corporation, vol. 49(2), pages 348-369, June.

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    More about this item

    Keywords

    Monopoly; Quality uncertainty; Verifiable information disclosure; D82; D83; L12; L15;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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