Armstrong, M.;
Vickers, J.;
Zhou, J.;
(2008)
Consumer protection and the incentive to become informed.
(Department Working Papers
08/02).
Department of Economics, University College London: London, UK.
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Abstract
We discuss the impact of consumer protection policies on consumers’ incentives to become informed of the best deals available in the market. In a market with costly information acquisition, we find that imposing a cap on suppliers’ prices reduces the incentive to become informed of market conditions, with the result that prices paid by consumers (both informed and uninformed) may rise. In a related model where consumers have the ability to refuse to receive marketing, we find that this ability softens price competition and can make all consumers worse off.
| Type: | Working / discussion paper |
|---|---|
| Title: | Consumer protection and the incentive to become informed |
| Open access status: | An open access version is available from UCL Discovery |
| Publisher version: | http://www.ucl.ac.uk/silva/economics/research/pape... |
| Language: | English |
| UCL classification: | UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics |
| URI: | https://discovery-pp.ucl.ac.uk/id/eprint/14336 |
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