Cournot duopoly and insider trading with two insiders
AbstractIn this paper, we study a version of the static Jain-Mirman (2002) model in which competition in the real sector is introduced. In this paper, we add competition in the stock sector to the Jain-Mirman (2002) paper. We show that the linear equilibrium structure is affected by this competition in the financial sector. Specifically, we show that the stock price set by the market maker reveals more information and that the behaviour of the profits of the manager depends on the parameters of the model. Moreover, we prove that the level of output produced by the manager is less than in Jain-Mirman (2002). Finally, we also study the case in which the market maker receives only one signal and analyze the comparative statics of this model when the market maker receives either one or two signals.
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Bibliographic InfoArticle provided by Elsevier in its journal The Quarterly Review of Economics and Finance.
Volume (Year): 46 (2006)
Issue (Month): 4 (September)
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Web page: http://www.elsevier.com/locate/inca/620167
Other versions of this item:
- Wassim Daher & Leonard J. Mirman, 2004. "Cournot duopoly and insider trading with two insiders," Cahiers de la Maison des Sciences Economiques b04077, Université Panthéon-Sorbonne (Paris 1).
- G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
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