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Consumer protection and the incentive to become informed

Armstrong, M.; Vickers, J.; Zhou, J.; (2008) Consumer protection and the incentive to become informed. (Department Working Papers 08/02). Department of Economics, University College London: London, UK. Green open access


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We discuss the impact of consumer protection policies on consumers’ incentives to become informed of the best deals available in the market. In a market with costly information acquisition, we find that imposing a cap on suppliers’ prices reduces the incentive to become informed of market conditions, with the result that prices paid by consumers (both informed and uninformed) may rise. In a related model where consumers have the ability to refuse to receive marketing, we find that this ability softens price competition and can make all consumers worse off.

Type: Working / discussion paper
Title: Consumer protection and the incentive to become informed
Open access status: An open access version is available from UCL Discovery
Publisher version: http://www.ucl.ac.uk/silva/economics/research/pape...
Language: English
UCL classification: UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of SandHS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/14336
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