The measurement of firm information about product demand

The role of firm information about product and financial markets is the sub ject of considerable research. Typically empirical research measures inform ation through price dispersion. However, the dispersion represents an imper fect measure of information. Several studies utilize stochastic frontier es timation techniques to measure worker information about the labor market. T his paper determines whether the frontier information measure can be applie d to the measurement of firm information about product markets. Several int uitive hypotheses are tested concerning the relationship between firm chara cteristics and information investments. The results are consistent with exp ectations and provide support for using stochastic frontier techniques to m easure firm information.