Competitive Information Disclosure in Search Markets
نویسندگان
چکیده
Buyers often search across multiple retailers or websites to learn which product best fits their needs. We study how sellers manage these search incentives through their disclosure policies (e.g. advertisements, product trials and reviews), and ask how competition affects information provision. If sellers can observe the beliefs of buyers (e.g. they can track buyers via their cookies) then, in a broad range of environments, there is a unique equilibrium in which sellers provide the “monopoly level” of information. However, if buyers are anonymous, then there is an equilibrium in which sellers provide full information as search costs vanish. Tracking software thus enables sellers to implicitly collude, providing a motivation for regulation.
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