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Market Transparency and Product Differentiation

Author

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  • Christian Schultz

    (Institute of Economics, University of Copenhagen)

Abstract

In a Hotelling market with endogenous choice of product characteristics increasing market transparency on the consumer side leads to less product differentiation, and lower prices and profits. This is welfare improving for all consumers and total surplus increases.

Suggested Citation

  • Christian Schultz, 2002. "Market Transparency and Product Differentiation," CIE Discussion Papers 2002-02, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
    • Handle: RePEc:kud:kuieci:2002-02
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    File URL: http://www.econ.ku.dk/cie/dp/dp_2000-2002/2002-02.pdf/
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    References listed on IDEAS

    as
    1. Bester, Helmut & Petrakis, Emmanuel, 1995. "Price competition and advertising in oligopoly," European Economic Review, Elsevier, vol. 39(6), pages 1075-1088, June.
    2. Nilsson, Arvid, 1999. "Transparency and Competition," SSE/EFI Working Paper Series in Economics and Finance 298, Stockholm School of Economics, revised 29 Nov 1999.
    3. Schultz, Christian, 2005. "Transparency on the consumer side and tacit collusion," European Economic Review, Elsevier, vol. 49(2), pages 279-297, February.
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    5. Jeffrey H. Fischer & Joseph E. Harrington Jr., 1996. "Product Variety and Firm Agglomeration," RAND Journal of Economics, The RAND Corporation, vol. 27(2), pages 281-309, Summer.
    6. Asher Wolinsky, 1984. "Product Differentiation with Imperfect Information," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 51(1), pages 53-61.
    7. Asher Wolinsky, 1983. "Retail Trade Concentration Due to Consumers' Imperfect Information," Bell Journal of Economics, The RAND Corporation, vol. 14(1), pages 275-282, Spring.
    8. Boone, J. & Potters, J.J.M., 2002. "Transparency, Prices and Welfare with Imperfect Substitutes," Discussion Paper 2002-7, Tilburg University, Center for Economic Research.
    9. Helmut Bester, 1998. "Quality Uncertainty Mitigates Product Differentiation," RAND Journal of Economics, The RAND Corporation, vol. 29(4), pages 828-844, Winter.
    10. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
    11. Stahl, Konrad, 1982. "Differentiated Products, Consumer Search, and Locational Oligopoly," Journal of Industrial Economics, Wiley Blackwell, vol. 31(1-2), pages 97-113, September.
    12. H. Peter Møllgaard & Per Baltzer Overgaard, 1999. "Market Transparency: A Mixed Blessing?," CIE Discussion Papers 1999-15, University of Copenhagen. Department of Economics. Centre for Industrial Economics, revised Feb 2000.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    market transparency; product differentiation; competition policy;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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