4.2 Article

When does a firm disclose product information?

Journal

RAND JOURNAL OF ECONOMICS
Volume 43, Issue 4, Pages 630-649

Publisher

WILEY-BLACKWELL
DOI: 10.1111/1756-2171.12002

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A firm chooses a price and the product information it discloses to a consumer whose tastes are privately known. We provide a necessary and sufficient condition on the match function for full disclosure to be the unique equilibrium outcome whatever the costs and prior beliefs about product and consumer types. It allows for products with different qualities as well as some horizontal match heterogeneity. With independently distributed product and consumer types, full disclosure is always an equilibrium and a necessary and sufficient equilibrium condition is that all firm types earn at least the full-disclosure profit.

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