ABSTRACT
This paper analyzes the quality disclosure when firms simultaneously choose the quantities of products to be produced. By assuming that each firm is privately informed about the quality of its own products and makes quality disclosure decisions after observing private information, we identify the effects of the degree of substitution/complementarity on the amount of disclosed information. We find that when commodities are substitute goods, fixing the disclosure cost, the relationship between competitiveness and the amount of disclosed information is non-monotonic. Furthermore, when commodities are complementary goods, increasing the degree of complementarity will lead to more information being disclosed.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Notes
1 For simplicity, we assume that the marginal cost is zero. We will discuss the robustness of the main results after relaxing this assumption in Section 4. Besides, the zero marginal cost assumption is extensively used in the existing literature (Gal-Or Citation1985; Vives Citation1984; Board Citation2009; Jansen Citation2017).