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Title:The Inefficiency of Market Transparency - A Model with Endogenous Entry PDF Logo
Authors:Gu, Yiquan
Hehenkamp, Burkhard
Issue Date:2010
Series/Report no.:Beiträge zur Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie - Session: Oligopolistic Competition and Network Formation F9-V2
Abstract:Including the entry decision in a Bertrand model with imperfectly informed consumers, we introduce a trade-off at the level of social welfare. On the one hand, market transparency is beneficial when the number of firms is exogenously given. On the other, a higher degree of market transparency implies lower profits and hence makes it less attractive to enter the market in the first place. It turns out that the second effect dominates: too much market transparency has a detrimental effect on consumer surplus and on social welfare.
Subjects:Market transparency
Endogenous entry
Homogenous products
JEL:L13
L15
D43
Document Type:Conference Paper
Appears in Collections:Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie

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