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Robust results on the sharing of firm-specific information: Incentives and welfare effects

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  • Amir, Rabah
  • Jin, Jim Y.
  • Troege, Michael

Abstract

Contrary to much of the existing literature, we obtain robust and clear-cut results for the incentives and welfare effects of information sharing when information is firm-specific. We show that firms' incentives to share this type of information are aligned with social welfare. Whenever revealing information is the dominant strategy (such as for Cournot firms revealing costs or Cournot and Bertrand firms revealing demand), it is socially beneficial. Only cost information in Bertrand competition will not be revealed but this is socially desirable, too. These findings are independent of distributional assumptions on random shocks and signals and hold for general asymmetric oligopoly with any mixture of substitute, complementary and independent goods.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Mathematical Economics.

Volume (Year): 46 (2010)
Issue (Month): 5 (September)
Pages: 855-866

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Handle: RePEc:eee:mateco:v:46:y:2010:i:5:p:855-866

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Web page: http://www.elsevier.com/locate/jmateco

Related research

Keywords: Information sharing Cost uncertainty Firm-specific information Benchmarking;

References

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  1. Albert Banal-Esta?l, 2002. "Information-Sharing Implications of Horizontal Mergers," UFAE and IAE Working Papers 544.02, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  2. Anthony Creane & Kaz Miyagiwa, 2007. "Information and Disclosure in Strategic Trade Policy," ISER Discussion Paper 0705, Institute of Social and Economic Research, Osaka University.
  3. Vives, Xavier, 1984. "Duopoly information equilibrium: Cournot and bertrand," Journal of Economic Theory, Elsevier, vol. 34(1), pages 71-94, October.
  4. Suil Pae, 2002. "Optimal Disclosure Policy in Oligopoly Markets," Journal of Accounting Research, Wiley Blackwell, vol. 40(3), pages 901-932, 06.
  5. William Novshek & Hugo Sonnenschein, 1982. "Fulfilled Expectations Cournot Duopoly with Information Acquisition and Release," Bell Journal of Economics, The RAND Corporation, vol. 13(1), pages 214-218, Spring.
  6. Kai-Uwe Kühn, 2001. "Fighting collusion by regulating communication between firms," Economic Policy, CEPR & CES & MSH, vol. 16(32), pages 167-204, 04.
  7. Lagerlof, Johan N.M., 2007. "Insisting on a non-negative price: Oligopoly, uncertainty, welfare, and multiple equilibria," International Journal of Industrial Organization, Elsevier, vol. 25(4), pages 861-875, August.
  8. Raith, Michael, 1996. "A General Model of Information Sharing in Oligopoly," Journal of Economic Theory, Elsevier, vol. 71(1), pages 260-288, October.
  9. Malueg, David A. & Tsutsui, Shunichi O., 1998. "Distributional assumptions in the theory of oligopoly information exchange1," International Journal of Industrial Organization, Elsevier, vol. 16(6), pages 785-797, November.
  10. David Malueg & Shunichi Tsutsui, 1996. "Coalition-proof information exchanges," Journal of Economics, Springer, vol. 63(3), pages 259-278, October.
  11. Sakai, Yasuhiro, 1985. "The value of information in a simple duopoly model," Journal of Economic Theory, Elsevier, vol. 36(1), pages 36-54, June.
  12. Jens Tapking, 2004. "Cost information sharing with uncertainty averse firms," Economic Theory, Springer, vol. 23(4), pages 879-907, May.
  13. Armantier, Olivier & Richard, Oliver, 2003. "Entry and Exchanges of Cost Information," Journal of Regulatory Economics, Springer, vol. 24(2), pages 223-41, September.
  14. Richard N. Clarke, 1983. "Collusion and the Incentives for Information Sharing," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 383-394, Autumn.
  15. Gal-Or, Esther, 1985. "Information Sharing in Oligopoly," Econometrica, Econometric Society, vol. 53(2), pages 329-43, March.
  16. Creane, Anthony, 2007. "Productivity information in vertical sharing agreements," International Journal of Industrial Organization, Elsevier, vol. 25(4), pages 821-841, August.
  17. Malueg, David A & Tsutsui, Shunichi O, 1998. "Oligopoly Information Exchange When Non-negative Price and Output Constraints May Bind," Australian Economic Papers, Wiley Blackwell, vol. 37(4), pages 363-71, December.
  18. Lode Li, 1985. "Cournot Oligopoly with Information Sharing," RAND Journal of Economics, The RAND Corporation, vol. 16(4), pages 521-536, Winter.
  19. Shapiro, Carl, 1986. "Exchange of Cost Information in Oligopoly," Review of Economic Studies, Wiley Blackwell, vol. 53(3), pages 433-46, July.
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Cited by:
  1. Lin, C.-Y. Cynthia & Muehlegger, Erich J., 2013. "On the use of heuristics to approximate competitors’ private information," Journal of Economic Behavior & Organization, Elsevier, vol. 86(C), pages 10-23.

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