Should incumbents deter new entrants adopting cost transparency?
研究新进入者是否应公开真实成本以吸引消费者，以及在位企业是否应通过低价策略阻止其进入，发现当消费者重视公平和透明度时，在位企业可能容忍新进入者而不必降价或退出。
To create differentiating value for socially conscious consumers, a new entrant may (or may not) reveal its true cost to consumers when entering a market. In response to this potential threat, should an existing incumbent operating under cost opacity set a sufficiently low price to deter the entrant from entering the market? We examine these questions in both monopolistic and duopolistic settings. In a monopolistic setting (when there is no incumbent), we find that the entrant should adopt cost transparency only when its true cost is sufficiently high or when its true cost is not high but consumers highly value cost transparency. We also explore a duopolistic setting in which a pre-existing incumbent firm is committed not to disclosing its true cost, and we examine if and when the incumbent firm should deter the entry of the new firm by setting a sufficiently low price. In traditional settings, the incumbent and the entrant compete solely on price without differentiation, making coexistence impossible. Hence, the incumbent either deters the entrant or exits the market. However, our model considers scenarios where consumers value fairness and transparency, and the incumbent has a reputation advantage. Consequently, as the entrant uses cost transparency to differentiate as an option to enter the market, competition is reduced, allowing the incumbent to tolerate the entrant without lowering its price or exiting the market. Therefore, our findings provide valuable insights for entrant firms on when to adopt cost transparency, and for incumbent firms on if and when to deter new competitors.