April 2018.
Abstract
This paper studies firms' disclosure decisions of product information and the welfare implication of mandatory information disclosure. I show that the incentive to (not) disclose product information could be summarized in two channels: the effect on the relative market power over rivals and the competitiveness in the market. Although mandatory information disclosure allows consumers to pick a better match, it could increase the average price in the market and decrease consumer welfare. I then present simple conditions on when mandatory disclosure always improve consumers welfare, and when it might hurt consumers. Paper
