Transparency, price-dependent demand and product variety

Yiquan Gu and Tobias Wenzel

No 4, DICE Discussion Papers from Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE)

Abstract: This paper revisits the relationship between transparency on the consumer side and product variety as analyzed in Schultz (2009). We identify two welfare effects of transparency. More transparency decreases price-cost margins which is beneficial forwelfare. On the other hand, more transparency reduces variety which can be positive or negative for welfare. Overall, more transparency is always welfareimproving.

Keywords: Market Transparency; Product Variety; Salop Model (search for similar items in EconPapers)
JEL-codes: L13 L15 L40 (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-com
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Journal Article: Transparency, price-dependent demand and product variety (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:dicedp:04

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