A model of labeling with horizontal differentiation and cost variability
We study optimal disclosure of variety by a multi-product firm with random costs. In our model there are two varieties that are horizontally differentiated and differ in overall quality, but buyers cannot distinguish between them without labels. The equilibrium prices for labeled varieties are incre...
| Autor principal: | |
|---|---|
| Formato: | Artículo preliminar |
| Lenguaje: | Inglés |
| Publicado: |
International Food Policy Research Institute
2011
|
| Materias: | |
| Acceso en línea: | https://hdl.handle.net/10568/153969 |
| _version_ | 1855540713506209792 |
|---|---|
| author | Saak, Alexander E. |
| author_browse | Saak, Alexander E. |
| author_facet | Saak, Alexander E. |
| author_sort | Saak, Alexander E. |
| collection | Repository of Agricultural Research Outputs (CGSpace) |
| description | We study optimal disclosure of variety by a multi-product firm with random costs. In our model there are two varieties that are horizontally differentiated and differ in overall quality, but buyers cannot distinguish between them without labels. The equilibrium prices for labeled varieties are increasing functions of the absolute value of the cost differential and do not reveal which variety is cheaper to produce. Nondisclosure is most common when there is moderate uncertainty about the relative input cost, not too much idiosyncrasy in consumer valuations, and not too much difference in quality across varieties. Although mandatory disclosure of variety benefits consumers, it decreases expected welfare when relative input cost variability is large and quality asymmetry is small. The cheaper variety tends to be oversupplied (undersupplied) when disclosure is voluntary (mandatory). Competition among multi-product firms that source inputs in the same upstream market may not lead to more disclosure.” |
| format | Artículo preliminar |
| id | CGSpace153969 |
| institution | CGIAR Consortium |
| language | Inglés |
| publishDate | 2011 |
| publishDateRange | 2011 |
| publishDateSort | 2011 |
| publisher | International Food Policy Research Institute |
| publisherStr | International Food Policy Research Institute |
| record_format | dspace |
| spelling | CGSpace1539692025-11-06T07:23:24Z A model of labeling with horizontal differentiation and cost variability Saak, Alexander E. information diversification labelling quality labels We study optimal disclosure of variety by a multi-product firm with random costs. In our model there are two varieties that are horizontally differentiated and differ in overall quality, but buyers cannot distinguish between them without labels. The equilibrium prices for labeled varieties are increasing functions of the absolute value of the cost differential and do not reveal which variety is cheaper to produce. Nondisclosure is most common when there is moderate uncertainty about the relative input cost, not too much idiosyncrasy in consumer valuations, and not too much difference in quality across varieties. Although mandatory disclosure of variety benefits consumers, it decreases expected welfare when relative input cost variability is large and quality asymmetry is small. The cheaper variety tends to be oversupplied (undersupplied) when disclosure is voluntary (mandatory). Competition among multi-product firms that source inputs in the same upstream market may not lead to more disclosure.” 2011 2024-10-01T13:58:40Z 2024-10-01T13:58:40Z Working Paper https://hdl.handle.net/10568/153969 en Open Access application/pdf International Food Policy Research Institute Saak, Alexander E. 2011. A model of labeling with horizontal differentiation and cost variability. IFPRI Discussion Paper 1075. https://hdl.handle.net/10568/153969 |
| spellingShingle | information diversification labelling quality labels Saak, Alexander E. A model of labeling with horizontal differentiation and cost variability |
| title | A model of labeling with horizontal differentiation and cost variability |
| title_full | A model of labeling with horizontal differentiation and cost variability |
| title_fullStr | A model of labeling with horizontal differentiation and cost variability |
| title_full_unstemmed | A model of labeling with horizontal differentiation and cost variability |
| title_short | A model of labeling with horizontal differentiation and cost variability |
| title_sort | model of labeling with horizontal differentiation and cost variability |
| topic | information diversification labelling quality labels |
| url | https://hdl.handle.net/10568/153969 |
| work_keys_str_mv | AT saakalexandere amodeloflabelingwithhorizontaldifferentiationandcostvariability AT saakalexandere modeloflabelingwithhorizontaldifferentiationandcostvariability |