Causes and consequences of fake transparency/excess information in food claims

This study develops novel multi-stage game-theoretic models of heterogeneous firms and consumers in vertically differentiated food product markets with asymmetric information to analyze the economic causes and market and welfare consequences of excess information/fake transparency in food labeling. Analytical results indicate that the firms’ incentives to adopt the excess information strategy, the Nash equilibrium configuration of firms adopting the strategy, and the market and welfare impacts of excess information are case-specific and dependent on the consumer reaction to excess information, the quality of the firms’ products, the degree of product differentiation between the brand producing firms, and whether the market is covered or not.