A BEJTE Topics article.

Abstract

This paper examines incentives for information disclosure in a oligopolistic market when buyers are unsure of the existence of that information. Previous empirical and theoretical work has shown that mandatory disclosure laws can be binding when buyers do not know whether the information exists. This paper shows that the information unraveling result is strengthened by competition not only because a market with more firms is increasingly likely to have at least one firm with quality high enough to want to disclose it (thus starting the information unraveling result) but also because firms reveal information that makes themselves look bad if they can make their competitors look worse. This results in prisoner's dilemma style incentives to reveal that ensures full disclosure as the number of firms goes to infinity.

Submitted: April 9, 2004 · Accepted: October 22, 2004 · Published: December 17, 2004

Originally published in Topics in Theoretical Economics.

Recommended Citation

Stivers, Andrew E. (2004) "Unraveling of Information: Competition and Uncertainty," Topics in Theoretical Economics: Vol. 4 : Iss. 1, Article 9.
Available at: http://www.bepress.com/bejte/topics/vol4/iss1/art9