Protecting buyers from fine print
Buyers typically do not read the …ne print in contracts, providing an incentive for a monopolist to draft terms which are unfavorable to buyers. We model this problem, proving that trade must then be inefficient. We show that regulation which mandates efficient terms raises welfare. More interesting...
| Main Authors: | , |
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| Format: | Article |
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Elsevier
2016
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| Online Access: | https://eprints.nottingham.ac.uk/33269/ |
| _version_ | 1848794597502746624 |
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| author | D'Agostino, Elena Seidmann, Daniel J. |
| author_facet | D'Agostino, Elena Seidmann, Daniel J. |
| author_sort | D'Agostino, Elena |
| building | Nottingham Research Data Repository |
| collection | Online Access |
| description | Buyers typically do not read the …ne print in contracts, providing an incentive for a monopolist to draft terms which are unfavorable to buyers. We model this problem, proving that trade must then be inefficient. We show that regulation which mandates efficient terms raises welfare. More interestingly, regulations which prohibit the least efficient terms may reduce welfare by inducing the monopolist not to other favorable terms. We extend these results to markets in which some buyers are naive, showing that prohibiting the least efficient terms may also harm the naive buyers. |
| first_indexed | 2025-11-14T19:18:43Z |
| format | Article |
| id | nottingham-33269 |
| institution | University of Nottingham Malaysia Campus |
| institution_category | Local University |
| last_indexed | 2025-11-14T19:18:43Z |
| publishDate | 2016 |
| publisher | Elsevier |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | nottingham-332692020-05-04T20:00:31Z https://eprints.nottingham.ac.uk/33269/ Protecting buyers from fine print D'Agostino, Elena Seidmann, Daniel J. Buyers typically do not read the …ne print in contracts, providing an incentive for a monopolist to draft terms which are unfavorable to buyers. We model this problem, proving that trade must then be inefficient. We show that regulation which mandates efficient terms raises welfare. More interestingly, regulations which prohibit the least efficient terms may reduce welfare by inducing the monopolist not to other favorable terms. We extend these results to markets in which some buyers are naive, showing that prohibiting the least efficient terms may also harm the naive buyers. Elsevier 2016-10 Article PeerReviewed D'Agostino, Elena and Seidmann, Daniel J. (2016) Protecting buyers from fine print. European Economic Review, 89 . pp. 42-54. ISSN 0014-2921 fine print; regulation http://www.sciencedirect.com/science/article/pii/S0014292116300885 doi:10.1016/j.euroecorev.2016.05.004 doi:10.1016/j.euroecorev.2016.05.004 |
| spellingShingle | fine print; regulation D'Agostino, Elena Seidmann, Daniel J. Protecting buyers from fine print |
| title | Protecting buyers from fine print |
| title_full | Protecting buyers from fine print |
| title_fullStr | Protecting buyers from fine print |
| title_full_unstemmed | Protecting buyers from fine print |
| title_short | Protecting buyers from fine print |
| title_sort | protecting buyers from fine print |
| topic | fine print; regulation |
| url | https://eprints.nottingham.ac.uk/33269/ https://eprints.nottingham.ac.uk/33269/ https://eprints.nottingham.ac.uk/33269/ |