Strategic pricing, signalling, and costly information acquisition

Bester, Helmut and Ritzberger, Klaus (2001) Strategic pricing, signalling, and costly information acquisition. International Journal of Industrial Organization, 19 (9), pp. 1347-1361. DOI: 10.1016/S0167-7187(00)00057-6

Full text not available from this repository.


Consider a market where an informed monopolist sets the price for a good or asset with a value unknown to potential buyers. Upon observing the price, buyers may pay some cost for information about the value before deciding on purchases. Under a belief-restriction, which generalizes the idea of the Cho–Kreps ‘intuitive criterion’, we establish a version of the Grossman–Stiglitz Paradox: there is no separating equilibrium with fully revealing prices. Yet, we also resolve the paradox. There is a unique equilibrium, and as the cost of information becomes small, the equilibrium approaches the full information outcome and prices become perfectly revealing. (author's abstract)

Item Type: Article in Academic Journal
Date Deposited: 27 Jan 2015 08:52
Last Modified: 01 Apr 2016 14:16
DOI: 10.1016/S0167-7187(00)00057-6
ISSN: 0167-7187

Actions (login required)

View Item View Item