Accessible Unlicensed Requires Authentication Published by De Gruyter January 19, 2017

Meet-the-competition clauses and the strategic disclosure of product quality

Cristián Troncoso-Valverde ORCID logo

Abstract

I examine the implications of meet-the-competition clauses (MCCs) for the strategic disclosure of product quality in a duopoly in which sellers can adopt these clauses before setting their prices. I show that MCCs generate incentives for the disclosure of product quality because these clauses facilitate monopoly pricing in states of nature in which the quality of products is the same. This suggests that MCCs may encourage the disclosure of information because sellers can use them to coordinate their pricing decisions based on the information revealed through disclosure.

JEL Classification: L15; D43; D83

Acknowledgment

I thank Jean P. Sepúlveda for discussion and helpful comments. I also thank an anonymous referee for very helpful feedback and suggestions that considerably improved the manuscript. I acknowledge financial support from CONICYT through the project FONDECYT INICIACIÓN 11140833.

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Published Online: 2017-1-19
Published in Print: 2016-10-1

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