In this paper we examine the behavior of a firm that produces a product with a privately-observed safety attribute …; that is, consumers cannot observe directly the product�s safety. The firm may, at a cost, disclose its safety prior to … sale; alternatively, if a firm does not disclose its safety then consumers can attempt to infer its safety from the price …

's price reveals its respective product quality. We focus mainly on a model in which the quality attribute is safety (so that … high safety. When quality is interpreted as consumer satisfaction, unobservable quality causes all prices to be distorted … quality is interpreted as product safety, the foregoing results are modified in that for some parameter values ex ante …

oligopolists produce differentiated products that also have a safety attribute. Consumption of these products may lead to harm (to … equilibrium safety effort and output levels to what a planner would choose. We consider two planners, one of whom is able to set … safety standards, but takes the market equilibrium output as given, and one of whom can control both safety effort and output …