2016
DOI: 10.1016/j.euroecorev.2016.05.004
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Protecting buyers from fine print

Abstract: 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 ine¢cient. We show that regulation which mandates e¢cient terms raises welfare. More interestingly, regulations which prohibit the least e¢cient terms may reduce welfare by inducing the monopolist not to o¤er favorable terms. We extend these results to markets in which some buyers are naive, showing that prohibiti… Show more

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Cited by 8 publications
(1 citation statement)
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“…use, diffusion and alterations of digital typefaces are being regulated and thus may impact consumer behaviour. I have highlighted the word may, as buyers generally tend not to read 'the small print' (D'Agostino & Seidmann, 2016). We have probably all been in similar situations: We use software (e.g.…”
Section: Fundamentalsmentioning
confidence: 99%
“…use, diffusion and alterations of digital typefaces are being regulated and thus may impact consumer behaviour. I have highlighted the word may, as buyers generally tend not to read 'the small print' (D'Agostino & Seidmann, 2016). We have probably all been in similar situations: We use software (e.g.…”
Section: Fundamentalsmentioning
confidence: 99%