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Oligopoly Information Exchange when Non‐negative Price and Output Constraints may Bind

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  • David A. Maleug
  • Shunichi O. Tsutsui

Abstract

The oligopoly information exchange literature has consistently employed linear demand functions. This paper explores whether earlier results are sensitive to the assumption of linear demand. Non‐linearity arises naturally from the condition that prices and outputs be non‐negative. We show standard results on information sharing can be reversed when there is the chance that non‐negativity constraints bind: in a homogeneous‐goods Cournot duopoly with constant marginal costs, information sharing can be profitable and it can reduce social welfare.

Suggested Citation

  • David A. Maleug & Shunichi O. Tsutsui, 1998. "Oligopoly Information Exchange when Non‐negative Price and Output Constraints may Bind," Australian Economic Papers, Wiley Blackwell, vol. 37(4), pages 363-371, December.
    • Handle: RePEc:bla:ausecp:v:37:y:1998:i:4:p:363-371
    DOI: 10.1111/1467-8454.00026
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    Cited by:

    1. Cornand, Camille & Dos Santos Ferreira, Rodolphe, 2020. "Cooperation in a differentiated duopoly when information is dispersed: A beauty contest game with endogenous concern for coordination," Mathematical Social Sciences, Elsevier, vol. 106(C), pages 101-111.
    2. Sjaak Hurkens, 2014. "Bayesian Nash equilibrium in “linear” Cournot models with private information about costs," International Journal of Economic Theory, The International Society for Economic Theory, vol. 10(2), pages 203-217, June.
    3. Richter, Jan & Viehmann, Johannes, 2014. "The value of information in explicit cross-border capacity auction regimes in electricity markets," Energy Policy, Elsevier, vol. 70(C), pages 74-84.
    4. Fabio Tramontana, 2013. "Information exchange in a Cournot duopoly with nonlinear demand function," DEM Working Papers Series 049, University of Pavia, Department of Economics and Management.

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