Partial shrouding in asymmetric markets

•We analyse add-on shrouding in an asymmetric market.•Partial shrouding equilibria exist: firms with high (low) add-on production cost shroud (unshroud).•Unshrouding firms charge lower base-good prices and obtain a higher market share than shrouding firms.

This paper studies shrouding of add-on information in a market where firms differ in add-on production costs. We show that partial shrouding equilibria, characterised by a selection result, exist: Firms with high (low) add-on costs shroud (unshroud). Unshrouding firms charge lower base-good prices than shrouding firms.