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Forced information disclosure and the fallacy of transparency in markets

Cason, Timothy N. and Plott, Charles R. (2005) Forced information disclosure and the fallacy of transparency in markets. Economic Inquiry, 43 (4). pp. 699-714. ISSN 0095-2583.

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A theory advanced in regulatory hearings holds that market performance will be improved if one side of the market is forced to publicly reveal preferences. For example, wholesale electricity producers claim that retail electricity consumers would pay lower prices if wholesale public utility demand is disclosed to producers. Experimental markets studied here featured decentralized, privately negotiated contracts, typical of the wholesale electricity markets. Two conclusions emerge: (1) such markets generally converge to the competitive equilibrium and (2) forced disclosure works to the disadvantage of the disclosing side. Information disclosure would result in higher wholesale and thus higher retail electricity prices.

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Additional Information:© 2005 Western Economic Association International. Advance Access publication August 3, 2005. Article first published online: 26 Mar. 2007.
Record Number:CaltechAUTHORS:20110810-090235985
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Official Citation:Cason, T. N. and Plott, C. R. (2005), FORCED INFORMATION DISCLOSURE AND THE FALLACY OF TRANSPARENCY IN MARKETS. Economic Inquiry, 43: 699–714. doi: 10.1093/ei/cbi049
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:24773
Deposited By: Tony Diaz
Deposited On:17 Oct 2011 16:59
Last Modified:17 Oct 2011 16:59

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