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Regulating False Discloure

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  • Janssen, Maarten

Abstract

Firms can communicate private information about product quality through a combination of pricing and disclosure where disclosure may be deliberately false. We examine the effect of regulation that penalizes false disclosure by firms in a competitive setting. The cost of false disclosure influences the mix of direct, costly information provision and price signaling in the market, and thereby market outcomes. Regulation reduces prices and the consumption distortion associated with price signaling.

Suggested Citation

  • Janssen, Maarten, 2017. "Regulating False Discloure," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168159, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc17:168159
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    More about this item

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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