Firms communicate product quality attributes to consumers through a variety of channels, such as pricing, advertising … such communication is that it takes on one of two alternative forms when quality is exogenous: 1) disclosure of quality … through a credible direct claim; 2) signaling of quality via producer actions that influence buyersÕ beliefs about quality. In …

How does the need to signal quality through price affect equilibrium pricing and profits, when a firm faces a similarly … private information about its own product's quality. We characterize a symmetric separating equilibrium in which each firm …'s price reveals its respective product quality. We focus mainly on a model in which the quality attribute is safety (so that …

vertical quality (e.g., consumer satisfaction) that is signaled via price softens price competition, and that imperfect … do). We show that low-quality firms always prefer playing the incomplete information game to the full-information analog …: their prices are higher and so are their profits. Moreover, for "high-value" markets, if the proportion of high-quality …