A note on welfare-improving ignorance about quality

Research output: Contribution to journalArticlepeer-review

3 Scopus citations


Consider a monopolist that is selling a high quality product when the quality is unknown to a fraction of the consumers. If the quality cannot be signaled and the fraction is sufficiently large, then the monopolist will offer a low price to induce uninformed consumers to buy. If the fraction is sufficiently small, then uninformed consumers are irrelevant to its optimal price. If the uninformed consumers are priced out of the market as a result, then welfare can decrease.

Original languageEnglish
Pages (from-to)585-590
Number of pages6
JournalEconomic Theory
Issue number3
StatePublished - Mar 2008


  • Asymmetric information
  • Learning
  • Quality

ASJC Scopus subject areas

  • Economics and Econometrics


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