Consumer confusion, obfuscation and price regulation

Gu, Yiquan ORCID: 0000-0002-4594-4852 and Wenzel, Tobias (2017) Consumer confusion, obfuscation and price regulation. Scottish Journal of Political Economy, 64 (2). pp. 169-190.

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Official URL: http://dx.doi.org/10.1111/sjpe.12121

Abstract

<jats:title>Abstract</jats:title><jats:p>This paper studies firms’ obfuscation choices in a duopoly setting where two firms differ in their marginal costs of production. We show that the high‐cost firm chooses maximum obfuscation while the low‐cost firm chooses minimal (maximal) obfuscation if the cost advantage is large (small). We argue that in this setting there is a new role for price regulation as it leads to more transparent pricing. Moreover, a price cap benefits social welfare as it shifts production to the more efficient low‐cost firm.</jats:p>

Item Type:	Article
Additional Information:	## TULIP Type: Articles/Papers (Journal) ##
Uncontrolled Keywords:	D18, L13, L51, Obfuscation, Consumer Protection, Price Cap
Depositing User:	Symplectic Admin
Date Deposited:	07 Jun 2019 10:58
Last Modified:	02 Oct 2023 23:16
DOI:	10.1111/sjpe.12121
Related URLs:	Publisher
URI:	https://livrepository.liverpool.ac.uk/id/eprint/3030347