We study how competition affects market transparency, taking into account that comparative performance is assessed via tournaments and contests. Extending Dye (1985) to a multi-firm setting in which
top performers are rewarded, we show that increased competition usually makes disclosure less likely, which lowers market transparency and may decrease per capita welfare. This result appears to be
robust to several model variations and as such, has implications for market regulation. (JEL D82, D83, L77, L25)
Carlin, Bruce I., Shaun William Davies, and Andrew Iannaccone.
"Competition, Comparative Performance, and Market Transparency."
American Economic Journal: Microeconomics,
Asymmetric and Private Information; Mechanism Design
Search; Learning; Information and Knowledge; Communication; Belief
Production, Pricing, and Market Structure; Size Distribution of Firms
Firm Performance: Size, Diversification, and Scope