Document Type

Discussion Paper

Publication Date

11-12-2023

CFDP Number

2373

CFDP Pages

58

Journal of Economic Literature (JEL) Code(s)

C72, D44, D82, D83

Abstract

A number of producers of heterogeneous goods with heterogeneous costs compete in prices. When producers know their own production costs and consumers know their values, consumer surplus and total surplus are aligned: the information structure and equilibrium that maximize consumer surplus also maximize total surplus. We report when alignment extends to the case where either consumers are uncertain about their own values or producers are uncertain about their own costs, and we also give examples showing when it does not. Less information for either producers or consumers may intensify competition in a way that benefits consumers but results in inefficient production.

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Economics Commons

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