A More General Framework to Analyze Whether Voluntary Disclosure is Insufficient or Excessive
- Levent Celik
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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.
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- 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
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- 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