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Information, Prices and Buyer Entry

Author

Listed:
  • Mei Dong
  • Janet Hua Jiang
  • Ling Sun

Abstract

Conventional wisdom suggests that information transparency about prices lowers prices and markups by intensifying seller competition. However, in markets with costly buyer entry, price transparency also draws in more buyers, increasing demand-side competition and putting upward pressure on prices. We show that this buyer entry effect may dominate, and prices and markups may rise with information transparency.

Suggested Citation

  • Mei Dong & Janet Hua Jiang & Ling Sun, 2026. "Information, Prices and Buyer Entry," Staff Working Papers 26-4, Bank of Canada.
    • Handle: RePEc:bca:bocawp:26-4
    DOI: 10.34989/swp-2026-4
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    References listed on IDEAS

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    1. Ricardo Lagos & Randall Wright, 2005. "A Unified Framework for Monetary Theory and Policy Analysis," Journal of Political Economy, University of Chicago Press, vol. 113(3), pages 463-484, June.
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    More about this item

    Keywords

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    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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