Week 4: Competition and Market Power
“Welcome to Week Four … Four Conditions Again”
- Week 4: Competition and Market Power > Overview > Welcome to Week Four
Week 4: Competition and Market Power > Overview > Welcome to Week Four
- What about information? How does it affect businesses? Would you like to be in a business where there is perfect information or is it the other way around?
- In a sense, it would be nice if you were selling something shoddy and said, “OK! Now as long as nobody knows that I am selling something shoddy, it would be really good.” So free information is a problem.
- On the other hand, if you think that your products are good, and you are competing on cost, and you can sell things at a cheaper price, then you want free information.
- How free information works is an interesting issue whether you want more information or vice versa.
- One of the things which people thought would happen that with the Internet and you have all these price comparison sites and all that that would lead to lower prices because everybody would know.
- The jury is still out, I mean if even people have looked at such issues, it doesn’t seem like more information actually leads to lower prices.
- I can benchmark, I say, “Oh! You are charging this price. So, why should I charge a lower price? I’ll charge that same price.”