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Economic conditions on exchange of technology and information : cournot's model applied to demand information risk in China

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  • Jiang, Yingying
  • Yoneyama, Takau
  • 米山, 高生

Abstract

A foreign firm is confronted with a demand information risk in the emerging Chinese market, resulting from information disparity between a foreign firm and a Chinese firm. This study analyzes such demand information risk and uses microeconomic theory to derive a management strategy. There are two main conclusions. Firstly, whether each firm adopts the demand information collection depends on the cost incurred in collecting its information. Furthermore, only one firm will collect the demand information if the gap in the demand information collection costs between both firms is considerable. Secondly, given that only the Chinese firm collects demand information, information sharing is enabled solely by a transaction involving information and technology, rather than information and money. We prove that each firm would be able to utilize the other's advantage if the variance of demand uncertainty were appropriate, not too small or large. Furthermore, we confirm that the possibility to realize such transaction increases when the expected Chinese market size and the technology gap between the foreign and Chinese firmsare considerable.

Suggested Citation

  • Jiang, Yingying & Yoneyama, Takau & 米山, 高生, 2008. "Economic conditions on exchange of technology and information : cournot's model applied to demand information risk in China," Hitotsubashi Journal of commerce and management, Hitotsubashi University, vol. 42(1), pages 17-28, October.
    • Handle: RePEc:hit:hitjcm:v:42:y:2008:i:1:p:17-28
    DOI: 10.15057/16291
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    References listed on IDEAS

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    1. Lode Li, 1985. "Cournot Oligopoly with Information Sharing," RAND Journal of Economics, The RAND Corporation, vol. 16(4), pages 521-536, Winter.
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    3. Jean-Pierre Ponssard, 1979. "Uncertainty in the demand function, Oligopolistic markets and the strategic role of information," Post-Print hal-00364248, HAL.
    4. Sakai, Yasuhiro, 1985. "The value of information in a simple duopoly model," Journal of Economic Theory, Elsevier, vol. 36(1), pages 36-54, June.
    5. Liu, Qihong & Serfes, Konstantinos, 2006. "Customer information sharing among rival firms," European Economic Review, Elsevier, vol. 50(6), pages 1571-1600, August.
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    Cited by:

    1. António Brandão & Joana Pinho, 2015. "Asymmetric Information And Exchange Of Information About Product Differentiation," Bulletin of Economic Research, Wiley Blackwell, vol. 67(2), pages 166-185, April.

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