Rivalry information acquisition and disclosure

Xinyu Li, Ronald Peeters

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

In the recent past, there have been numerous scandals around poor product qualities various industries. Although it can be easily rationalized why bad practices have not been reported by the inflictors themselves, it is more difficult to understand why the non-inflicting competitors did not report their rivals' acts. In this paper, we study these competitors' incentives to acquire and to disclose information on the quality of their rivals' products and question when we can leave the information disclosure process to the competitive pressure of markets and when there is a need for governmentale intervention. We find that low quality levels can be disclosed in markets that exhibit negative spill-over effects, but should not be expected to be disclosed in markets that exhibit a Positive spill-over effect. A regulatory policy on quality testing and disclosure may be more effective in the latter type of market.

Original languageEnglish
Pages (from-to)610-623
Number of pages14
JournalJournal of Economics & Management Strategy
Volume26
Issue number3
DOIs
Publication statusPublished - 2017

Keywords

  • QUALITY
  • COMPETITION
  • PRICE
  • DIFFERENTIATION
  • REPUTATION
  • MARKETS
  • LEMONS

Cite this