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We consider an oligopolistic market where firms compete in price and quality and where consumers are heterogeneous in knowledge: some consumers know both the prices and quality of the products offered, some know only the prices and some know neither. We show that two types of signalling...
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offers especially when many consumers prefer comparable offers. This occurs after initial periods with strong competition and … leads to lower welfare for all consumers. In treatments where firms cannot monitor the competition, firms end up having to …
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