Consumers increasingly value the environmental and social responsibility of the production processes used by firms, yet these processes often remain unobservable, even after consumption. In this paper, we develop a simple model to examine firms' technology choices and subsequent price competition in markets for such label credence goods with hidden process attributes. Using a multi-sender signaling framework, we show that in the payoff-dominant equilibrium, firms can partially signal their production choices and avoid Bertrand competition when at least one firm adopts a green technology. Surprisingly, increasing consumers' environmental concern or eliminating the information asymmetry may reduce social welfare by discouraging green production.
Firms selling differentiated products post prices to entice consumers to examine and purchase their products. Consumers inspect these products in increasing order of prices. There exists no pure-strategy equilibrium. We characterize the mixed-strategy equilibrium and show that prices are driven down to marginal cost as the number of firms goes to infinity. For the case of uniformly distributed match values, the equilibrium price distribution is derived explicitly (up to the bounds of the support). A larger number of competitors and higher search costs lead to stochastically lower prices. The predictions of the model fit observed price patterns in online markets for differentiated products.