Too Much of a Good Thing? Welfare Consequences of Market Transparency

Gu, Yiquan ORCID: 0000-0002-4594-4852 and Hehenkamp, Burkhard (2014) Too Much of a Good Thing? Welfare Consequences of Market Transparency. Journal of Institutional and Theoretical Economics, 170 (2). p. 225.

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Official URL: http://dx.doi.org/10.1628/093245614x13895979380392

Abstract

This paper studies welfare consequences of consumer-side market transparency with endogenous entry of firms. Different from most studies, we consider the unique symmetric entry equilibrium, which is in mixed strategies. We identify two effects of market transparency on welfare: a competition effect and a novel market-structure effect. We show, surprisingly, that for almost all demand functions the negative market-structure effect eventually dominates the positive competition effect as the market becomes increasingly transparent. Consumer-side market transparency can therefore be socially excessive even without collusion. The only exception among commonly used demand functions is the set of constant demand functions

Item Type:	Article
Uncontrolled Keywords:	Generic health relevance
Depositing User:	Symplectic Admin
Date Deposited:	24 Oct 2016 07:35
Last Modified:	16 Mar 2024 06:36
DOI:	10.1628/093245614x13895979380392
Related URLs:	Publisher
URI:	https://livrepository.liverpool.ac.uk/id/eprint/3003947