Noisy Signaling in Monopoly

We study the informational role of prices in a stochastic environment. We provide a closed-form solution of the monopoly problem when the price imperfectly signals quality to the uninformed buyers. We then study the effect of noise on output, market price, information flows, and expected profits. The presence of noise may reduce the informational externality due to asymmetric information, which increases the firm's expected profits.

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Year of publication:	2011-03
Authors:	Mirman, Leonard J. ; Salgueiro, Egas ; Santugini, Marc
Institutions:	Institut d'Économie Appliquée, HEC Montréal (École des Hautes Études Commerciales)
Subject:	Asymmetric information \| learning \| monopoly \| noise \| quality \| rational expectations \| signaling

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Extent:	application/pdf
Series:	Cahiers de recherche.
Type of publication:	Book / Working Paper
Notes:	The price is Free Number 11-03 18 pages
Classification:	D21 - Firm Behavior ; D42 - Monopoly ; D82 - Asymmetric and Private Information ; D83 - Search, Learning, Information and Knowledge ; D84 - Expectations; Speculations ; L12 - Monopoly; Monopolization Strategies ; L15 - Information and Product Quality; Standardization and Compatibility
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10008876408