Abstract
Both consumers and a monopolist producer are uncertain about a good's quality. I derive conditions under which the value of public information about quality will be positive or negative to consumers and the firm. I find that the firm always prefers more information, but consumers may not. I identify two properties of costs functions that lead to a negative value of information for consumers: increasing returns to scale and "sufficiently" convex marginal costs. If, however, demand and cost functions are linear, then consumers always prefer more information. I also analyze the aggregate value of information and extensions to nonmonopolistic markets.
Original language | English (US) |
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Pages (from-to) | 803-815 |
Number of pages | 13 |
Journal | RAND Journal of Economics |
Volume | 27 |
Issue number | 4 |
DOIs | |
State | Published - 1996 |
Externally published | Yes |
ASJC Scopus subject areas
- Economics and Econometrics