Opaque Selling

Abstract

We study "opaque" selling in multiproduct environments - a marketing practice in which sellers strategically withhold product information by keeping important characteristics of their products hidden until after purchase. We show that a monopolist will always use opaque selling, but it is not first-best optimal to do so. However, opaque selling might be used at the constrained optimum (with the monopolist's pricing behavior taken as given). For linear disutility costs, it is optimal for a monopolist to offer a single opaque product.