Transparency, Prices and Welfare with Imperfect Substitutes

28 Pages Posted: 16 Apr 2002

See all articles by Jan Boone

Jan Boone

Tilburg University - Center for Economic Research (CentER); Centre for Economic Policy Research (CEPR); TILEC

Johannes (Jan) J. M. Potters

Tilburg University - CentER

Date Written: March 2002

Abstract

Markets that are not completely transparent feature complex comparative statics with respect to the effect of number of firms, elasticity of substitution between goods and degree of transparency on equilibrium prices. The main result is that the following 'common wisdom' is incorrect: more transparent markets always feature lower prices, higher consumer welfare and lower price dispersion.

Keywords: Transparency, substitution, prices

JEL Classification: D40, L10

Suggested Citation

Boone, Jan and Potters, Johannes (Jan) J. M., Transparency, Prices and Welfare with Imperfect Substitutes (March 2002). CEPR Discussion Paper No. 3256. Available at SSRN: https://ssrn.com/abstract=306825

Jan Boone (Contact Author)

Tilburg University - Center for Economic Research (CentER) ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 466 2399 (Phone)
+31 13 466 3042 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

TILEC ( email )

Warandelaan 2
Tilburg, 5000 LE
Netherlands

Johannes (Jan) J. M. Potters

Tilburg University - CentER ( email )

Department of Economics
P.O. Box 90153
5000 LE Tilburg
Netherlands
+31 13 466 8204 (Phone)
+31 13 466 3042 (Fax)

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