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The Impact of Uniform Pricing Regulations on Incentives to Generate and Disclose Accounting Information

Author

Listed:
  • Anil Arya

    (Fisher College of Business, The Ohio State University, Columbus, Ohio 43210)

  • Brian Mittendorf

    (Fisher College of Business, The Ohio State University, Columbus, Ohio 43210)

  • Dae-Hee Yoon

    (School of Business, Yonsei University, Seoul 03722, Korea)

Abstract

A persistent question in industrial organization is whether regulations restricting price discrimination in input markets can promote efficiency. Despite the extensive study of the economic effects of input pricing regulations, the literature is bereft of an examination of the role of accounting information. In this paper, we seek to fill the gap by modeling the effects of uniform pricing restrictions in input markets on firms’ information generation and disclosure. In doing so, we find that information considerations present an impetus for uniform pricing requirements since they promote incentives for retail firms to both acquire and disclose relevant accounting information. In effect, by shielding retail firms from excessive supplier exploitation, uniform pricing regulations create a richer and more transparent information environment. This, then, leads to welfare gains and even benefits that can accrue naturally to all supply chain partners including the supplier, whose actions are constrained by the uniform pricing regulation. This paper was accepted by Brian Bushee, accounting.

Suggested Citation

  • Anil Arya & Brian Mittendorf & Dae-Hee Yoon, 2021. "The Impact of Uniform Pricing Regulations on Incentives to Generate and Disclose Accounting Information," Management Science, INFORMS, vol. 67(3), pages 1975-1992, March.
    • Handle: RePEc:inm:ormnsc:v:67:y:2021:i:3:p:1975-1992
    DOI: 10.1287/mnsc.2019.3503
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    References listed on IDEAS

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