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| Author: | Schlee, E. E. |
| Title: | The value of information about product quality |
| Journal: | RAND Journal of Economics
1996 : WINTER, VOL. 27:4, p. 803-815 |
| Index terms: | PRODUCTS QUALITY INFORMATION VALUE ANALYSIS |
| Language: | eng |
| Abstract: | Buyers and sellers are often uncertain about the quality of the goods they exchange. In this paper conditions are derived under which the value of public nformation about quality will be negative or positive to the firm and consumers. The firm prefers more information unlike consumers. Properties of costs functions are identified, that lead to a negative value of information for consumers: increasing returns to scale and sufficiently convex marginal costs. Consumers prefer more information if demand and cost functions are linear. The aggregation value of information and extensions to nonmonopolistic markets are also analyzed. |
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