Eliciting Demand Information Through Cheap Talk : An Argument in Favor of Price Regulations

A firm must decide whether to launch a new product. A launch implies considerable fixed costs, so the firm would like to assess downstream demand before it decides. We study under which conditions a potential buyer would be willing to reveal his willingness to pay under different pricing regimes. We show that the firm's welfare - as well as consumers' - may be higher with a commitment to linear pricing than when pricing is unrestricted. That is, if informational asymmetries are significant, price regulations such as the Robinson-Patman Act may be endorsed by all parties

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Year of publication:	2006
Authors:	Frisell, Lars ; Lagerlöf, Johan N. M.
Publisher:	[S.l.] : SSRN
Subject:	Theorie \| Theory \| Asymmetrische Information \| Asymmetric information \| Zahlungsbereitschaftsanalyse \| Willingness to pay \| Konsumentenverhalten \| Consumer behaviour \| Preismanagement \| Pricing strategy \| Markteintritt \| Market entry \| Innovation \| Preisdifferenzierung \| Price discrimination \| Preisregulierung \| Price regulation

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