Competitive Disclosure of Multiple Product Attributes

33 Pages Posted: 28 Mar 2022 Last revised: 17 Mar 2023

See all articles by James A. Dearden

James A. Dearden

Lehigh University

David Goldbaum

University of Technology Sydney

Ernest Lai

Lehigh University - Department of Economics

Qichao Shi

Southwestern University of Finance and Economics

Date Written: April 4, 2022

Abstract

We analyze a duopolistic model of quality disclosure in which product differentiation can be either horizontal or vertical under two vertically differentiated product attributes. Disclosure is fully revealing in the absence of disclosure cost. When disclosure is costly, firms partially disclose. We apply the familiar economic properties of absolute and comparative advantages in a novel way to characterize partial disclosure under the multiple product attributes. The type of product differentiation and intensity of competition interact with absolute and comparative attribute advantages in determining the equilibrium non-disclosure sets of the firms. When consumers fall short of forming rational expectation after non-disclosure, firms may partially disclose even without disclosure cost, and the same properties continue to dictate firms' disclosure behavior in the boundedly rational paradigm.

Keywords: Quality Disclosure; Multiple Product Attributes; Product Differentiation; Absolute and Comparative Advantages; Boundedly Rational Consumers

JEL Classification: C72, D21, D82, L13, L15

Suggested Citation

Dearden, James A. and Goldbaum, David and Lai, Ernest and Shi, Qichao, Competitive Disclosure of Multiple Product Attributes (April 4, 2022). Available at SSRN: https://ssrn.com/abstract=4045593 or http://dx.doi.org/10.2139/ssrn.4045593

James A. Dearden

Lehigh University ( email )

621 Taylor Street
Department of Economics
Bethlehem, PA 18015
United States

Ernest Lai

Lehigh University - Department of Economics ( email )

620 Taylor Street
Bethlehem, PA 18015
United States

Qichao Shi (Contact Author)

Southwestern University of Finance and Economics ( email )

55 Guanghuacun St,
Chengdu, Sichuan 610074
China

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