Lars Frisell and Johann Lagerlof (2005) Eliciting Demand Information through Cheap Talk: An Argument in Favor of Price Regulations.
Full text access: Open
A firm must decide whether to launch a new product. A launch implies considerable fixed costs, so the firm would like to assess downstream demand before it decides. We study under which conditions a potential buyer would be willing to reveal his willingness to pay under different pricing regimes. We show that the firm’s welfare — as well as consumers’ — may be higher with a commitment to linear pricing than when pricing is unrestricted. That is, if informational asymmetries are significant, price regulations such as the Robinson-Patman Act may be endorsed by all parties.
This is a Accepted version This version's date is: 2005 This item is not peer reviewed
https://repository.royalholloway.ac.uk/items/1829fef0-a2c2-ce93-077c-2dafde31eff0/1/
Deposited by Leanne Workman (UXYL007) on 12-Oct-2012 in Royal Holloway Research Online.Last modified on 12-Oct-2012
©2005 Lars Frisell and Johann Lagerlöf. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit including © notice, is given to the source.