Vertically differentiated duopoly with unaware consumers

We study information disclosure in a vertically differentiated duopoly with unaware consumers. Sellers have private information about the adverse effect of their products, while consumers are unaware of existence of such adverse effect unless they are informed by the sellers. We show that information remains hidden only if information disclosure reduces the size of the market. In such a case, whether information is disclosed depends on the intensity of competition, the difference of the adverse effect between the two sellers, and the timing at which pricing and information disclosure decisions are made.

► Consider a vertically differentiated duopoly with unaware consumers. ► Information disclosure about an adverse effect takes place if the market is fully covered. ► With partial coverage we characterize situations in which disclosure does not take place.