Curbing obfuscation: Empower consumers or regulate firms?
| Autor: | Yiquan Gu, Tobias Wenzel |
|---|---|
| Jazyk: | angličtina |
| Rok vydání: | 2020 |
| Předmět: |
Marginal cost
Economics and Econometrics Consumer confusion Strategy and Management 05 social sciences Economics Econometrics and Finance (miscellaneous) Public policy Social Welfare ComputingMilieux_LEGALASPECTSOFCOMPUTING Microeconomics Obfuscation (software) Harm 0502 economics and business Industrial relations Business Product (category theory) 050207 economics Market model 050205 econometrics |
| Zdroj: | International Journal of Industrial Organization |
| ISSN: | 0167-7187 |
| Popis: | This paper develops a market model where consumers refrain from buying products that they are unable to understand and a firm can influence the probability of a consumer understanding its offer. In equilibrium, firms artificially increase product complexity, and firms that offer more transparent products choose on average higher prices. We study two sets of public policies. We show that consumer side policies may have the unintended consequence of encouraging obfuscation while firm side policies are always effective in curbing obfuscation. Interestingly, a consumer side policy can even harm consumers when it protects consumers so much that it greatly increases the marginal effectiveness of obfuscation. Policies on both sides can either increase or decrease social welfare depending on the marginal effectiveness and the marginal cost of obfuscation. Our main insights hold in both asymmetric and symmetric obfuscation equilibria. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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