Interplay between quality disclosure and cross-channel free riding

Abstract This study investigates the interaction between online and offline retailers’ product information-disclosure decisions and the behaviors of showrooming (the phenomenon that consumers access product information offline but make the actual purchase online) or webrooming (the phenomenon that consumers access product information online but make the actual purchase offline). In these situations, consumers can only obtain product information by themselves from different channels. We find that the optimal choice for online retailers is to allow webrooming behavior and to not invest in information disclosure. Meanwhile, the optimal choice for offline retailers can be to either invest or not invest in product information disclosure. Specifically, when an offline retailer invests in product information disclosure, if the cost is low, the equilibrium profit will increase; however, if the product information-disclosure cost is high, the equilibrium profit will first increase and then decrease.

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