Year: 2009
Type: article
Abstract: We discuss the impact of consumer protection policies on consumers' incentives to become informed of the best deals available in the market. In a market with costly information acquisition, we find that imposing a cap on suppliers' prices reduces the incentive to become informed of market conditions, with the result that prices paid by consumers (both informed and uninformed) may rise. In a related model where consumers have the ability to refuse to receive marketing, we find that this ability softens price competition and can make all consumers worse off.
Authors: Mark Armstrong, John Vickers, Jidong Zhou
Institutions: University College London, University of Oxford
Language: English
Subfield: Marketing
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W1570837614