*We are very grateful to the Editor and three anonymous referees for their insightful comments. All remaining errors are our own.
QUALITY DISCLOSURE AND COMPETITION*
Article first published online: 20 FEB 2009
© 2009 The Authors. Journal compilation © 2009 Blackwell Publishing Ltd. and the Editorial Board of The Journal of Industrial Economics
The Journal of Industrial Economics
Volume 57, Issue 1, pages 167–196, March 2009
How to Cite
LEVIN, D., PECK, J. and YE, L. (2009), QUALITY DISCLOSURE AND COMPETITION. The Journal of Industrial Economics, 57: 167–196. doi: 10.1111/j.1467-6451.2009.00366.x
- Issue published online: 20 FEB 2009
- Article first published online: 20 FEB 2009
We analyze costly quality disclosure with horizontally differentiated products under duopoly and a cartel, and characterize the effect of competition on disclosure and welfare. We show that expected disclosure is higher under a cartel than under duopoly, and the welfare comparison depends on the level of disclosure cost: when the disclosure cost is low, welfare is higher under a cartel than duopoly, but when the disclosure cost is high, welfare is higher under duopoly. In either market structure, disclosure is excessive in terms of total surplus, but insufficient in terms of consumer surplus.