What are the effects of transparancy on the consumer side (CT)?

1. The prerequisite for competition is that consumers respond to price and quality signals. The faster and stronger the consumer responds, the greater the incentive for the companies to compete on price and quality. Increase in CT implies that consumers are better informed and can respond faster and stronger to price and quality signals. 2. Implication for cartel formation: Increase in CT increases incentives for companies to break cartel agreements, for example - a big potential gain by lowering the price. With higher CT the market demand is more elastic, so consumers switch faster to the cheaper company.