If Firms Have an Incentive to Hide Information from Mandatory

question 36

Multiple Choice

If firms have an incentive to hide information from mandatory disclosure because the information is proprietary,then which of the following remedies is the least intrusive way to overcome this incentive?

• A)leave it to the market
• B)separation of functions
• C)supervisory oversight
• D)socialization of information production

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Definitions:

Arbitrage

The simultaneous purchase and sale of the same assets in different markets to profit from unequal prices.

Vertical Contracts

Agreements between firms at different levels in the supply chain, such as between a manufacturer and a retailer, to control the terms of sale or distribution.

Upstream Price Discrimination

A pricing strategy where producers or wholesalers charge different prices to retailers or distributors, often based on the amount being purchased or the bargaining power of the buyer.

New Product

refers to a good or service recently developed or introduced to the market that fulfills a newly identified or existing customer need.