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Consumer protection and the incentive to become informed

Armstrong, M.; Vickers, J.; Zhou, J.; (2009) Consumer protection and the incentive to become informed. Journal of the European Economic Association , 7 (2-3) pp. 399-410. 10.1162/JEEA.2009.7.2-3.399. Green open access

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Abstract

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: Article
Title: Consumer protection and the incentive to become informed
Open access status: An open access version is available from UCL Discovery
DOI: 10.1162/JEEA.2009.7.2-3.399
Publisher version: http://dx.doi.org/10.1162/JEEA.2009.7.2-3.399
Language: English
UCL classification: UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/17509
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