Externalities and Asymmetric Information

Externalities and Asymmetric Information*

A reconsideration of the Pigovian theory of regulating externalities via taxation is undertaken for environments with private information. The presence of private information may have no effect on the social optimum; but when it has an impact, it is to cause a group of different agents to share the same production or consumption levels. The model developed provides an appealing characterization...

Information And Communication Technology Externalities And Economic Growth In Newly Industrialized Countries

Information Externalities and Intermediaries in Frictional Search Markets Information Externalities and Intermediaries in Frictional Search Markets *

In frictional matching markets with heterogeneous buyers and sellers, sellers incur discrete showing costs to show goods to buyers who incur discrete inspection costs to assess the suitability of the goods on offer. This paper studies how brokers can help reduce these costs by managing the level and mix of goods in their inventory. We find that intermediaries emerge and improve social welfare w...

Consumer Information and Firm Pricing: Negative Externalities from Improved Information

We analyze the effect of consumer information on firm pricing in a model where consumers search for prices and matches with products. We consider two types of consumers. Uninformed consumers do not know in advance their match values with firms, whereas informed consumers do. Prices are lower the greater the proportion of uninformed consumers. Hence uninformed consumers exert a positive external...

CSR in an Asymmetric Duopoly with Environmental Externalities

We investigate a linear state di¤erential game describing an asymmetric Cournot duopoly with capacity accumulation à la Ramsey and a negative environmental externality (pollution), in which one of the …rms has adopted corporate social responsibility (CSR) in its statute, and therefore includes consumer surplus and the environmental e¤ects of production in its objective function. If the market i...