Competition, disclosure and signalling
- Author(s)
- Maarten Janssen, Santanu Roy
- Abstract
Competition creates strategic incentives for firms to communicate private information about product quality through signalling rather than voluntary disclosure. In a duopoly where firms may disclose quality before setting prices and prices may signal quality, non-disclosure by all firms may often be the unique symmetric outcome even if disclosure cost vanishes. A high-quality firm may not disclose even if it has strong competitive advantage over a low-quality rival. This provides an alternative explanation of infrequent voluntary disclosure. Although product information is always communicated whether or not firms disclose, signalling distortions may provide a rationale for mandatory disclosure regulation.
- Organisation(s)
- Department of Economics
- External organisation(s)
- Southern Methodist University
- Journal
- The Economic Journal
- Volume
- 125
- Pages
- 86-114
- No. of pages
- 29
- ISSN
- 0013-0133
- DOI
- https://doi.org/10.1111/ecoj.12110
- Publication date
- 03-2014
- Peer reviewed
- Yes
- Austrian Fields of Science 2012
- 502047 Economic theory
- ASJC Scopus subject areas
- Economics and Econometrics
- Portal url
- https://ucris.univie.ac.at/portal/en/publications/competition-disclosure-and-signalling(e393c27a-c8c7-4c27-82c2-030713c9a503).html