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Martin Sefton and John Morgan
 
''Information externalities in a model of sales''
( 2001, Vol. 4 No.7 )
 
 
We anlayze Varian's (1980) Model of Sales, and show that when the number of uninformed consumers increases, prices become less competitive for all consumers. Thus, the influx of uninformed consumers generates a negative externality increasing the prices paid by informed consumers.
 
 
Keywords:
JEL: D0 - Microeconomics: General
 
Manuscript Received : Jul 18 2001 Manuscript Accepted : Jul 18 2001

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