Voluntary Quality Disclosure Under Price-Signaling Competition

Managerial and Decision Economics, Forthcoming

Posted: 6 Sep 2011  

Fabio Caldieraro

University of Washington

Dongsoo Shin

Santa Clara University - Leavey School of Business

Andrew Stivers

FDA

Date Written: August 4, 2011

Abstract

We analyze an oligopolistic competition with differentiated products and qualities. The quality of a product is not known to consumers. Each firm can make an imperfect disclosure of its product quality before engaging in price-signaling competition. There are two regimes for separating equilibrium in our model depending on the parameters. Our analysis reveals that, in one of the separating regimes, price signaling leads to intense price competition between the firms under which not only the high-quality firm, but also the low-quality firm chooses to disclose its product quality to soften the price competition.

Keywords: oligopoly, price competition, signaling, voluntary quality disclosure

JEL Classification: D82, L13, L15, M3

Suggested Citation

Caldieraro, Fabio and Shin, Dongsoo and Stivers, Andrew, Voluntary Quality Disclosure Under Price-Signaling Competition (August 4, 2011). Managerial and Decision Economics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1905267

Fabio Caldieraro

University of Washington ( email )

Seattle, WA 98195
United States

Dongsoo Shin (Contact Author)

Santa Clara University - Leavey School of Business ( email )

500 El Camino Real
Santa Clara, CA California 95053
United States

Andrew Stivers

FDA ( email )

5600 Fishers Lane
Rockville, MD 20857-0001
United States

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