A More General Framework to Analyze Whether Voluntary Disclosure is Insufficient or Excessive
- Levent Celik
- … show all 1 hide
Rent the article at a discountRent now
* Final gross prices may vary according to local VAT.Get Access
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.
- Board, O. (2009). Competition and disclosure. The Journal of Industrial Economics, 57(1), 197–213. CrossRef
- Cheong, I., & Kim, J.-Y. (2004). Costly information disclosure in oligopoly. The Journal of Industrial Economics, 52(1), 121–132. CrossRef
- Daughety, A. F., & Reinganum, J. F. (2008). Communicating quality: A unified model of disclosure and signalling. The RAND Journal of Economics, 39(4), 973–989. CrossRef
- Dranove, D., & Jin, G. Z. (2010). Quality disclosure and certification: Theory and practice. Journal of Economic Literature, 48(4), 935–63. CrossRef
- Dye, R. A. (1985). Disclosure of nonproprietary information. Journal of Accounting Research, 23(1), 123–145.
- Fishman, M. J., & Hagerty, K. M. (1990). The optimal amount of discretion to allow in disclosure. The Quarterly Journal of Economics, 105(2), 427–444. CrossRef
- Grossman, S. J., & Hart, O. D. (1980). Disclosure laws and takeover bids. The Journal of Finance, 35(2), 323–334. CrossRef
- Grossman, S. J. (1981). The informational role of warranties and private disclosure about product quality. Journal of Law and Economics, 24(3), 461–483. CrossRef
- Jovanovic, B. (1982). Truthful disclosure of information. The Bell Journal of Economics, 13(1), 36–44.
- Matthews, S., & Postlewaite, A. (1985). Quality testing and disclosure. The RAND Journal of Economics, 16(3), 328–340.
- Milgrom, P. R. (1981). Good news and bad news: Representation theorems and applications. The Bell Journal of Economics, 12(2), 380–391.
- Milgrom, P., & Roberts, J. (1986). Relying on the information of interested parties. The RAND Journal of Economics, 17(1), 18–32.
- Shin, H.S. (1994). News management and the value of firms. The RAND Journal of Economics, 25(1), 58–71.
- A More General Framework to Analyze Whether Voluntary Disclosure is Insufficient or Excessive
Review of Industrial Organization
Volume 44, Issue 2 , pp 161-178
- Cover Date
- Print ISSN
- Online ISSN
- Springer US
- Additional Links
- Quality uncertainty
- Verifiable information disclosure
- Industry Sectors
- Levent Celik (1)
- Author Affiliations
- 1. CERGE-EI (a joint workplace of Charles University and the Economics Institute of the Academy of Sciences of the Czech Republic), Politickych veznu 7, 111 21 , Prague 1, Czech Republic