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Information Use and Acquisition in Price†setting Oligopolies

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  • David P. Myatt
  • Chris Wallace

Abstract

Asymmetric price†setting multi†product suppliers have access to multiple sources of information about demand conditions, where the publicity of each source corresponds to the cross†industry correlation of signals received from it. A signal's influence on suppliers’ prices is increasing in its publicity as well as in its precision. The emphasis on relatively public information is stronger for smaller suppliers who control narrower product portfolios. When information is endogenously acquired, suppliers listen to only a subset of information sources. This subset is smaller when products are less differentiated and when the industry is less concentrated. Smaller suppliers focus attention on fewer information sources. The inefficiencies arising from information acquisition and use are identified.

Suggested Citation

  • David P. Myatt & Chris Wallace, 2018. "Information Use and Acquisition in Price†setting Oligopolies," Economic Journal, Royal Economic Society, vol. 128(609), pages 845-886, March.
  • Handle: RePEc:wly:econjl:v:128:y:2018:i:609:p:845-886
    DOI: 10.1111/ecoj.12410
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    Cited by:

    1. Li, Yunan, 2019. "Efficient mechanisms with information acquisition," Journal of Economic Theory, Elsevier, vol. 182(C), pages 279-328.
    2. Camille Cornand & Rodolphe Dos Santos Ferreira, 2020. "The social value of information and the competition motive: price versus quantity games," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 70(4), pages 1101-1137, November.
    3. Myatt, David P. & Wallace, Chris, 2019. "Information acquisition and use by networked players," Journal of Economic Theory, Elsevier, vol. 182(C), pages 360-401.
    4. Jeitschko, Thomas D. & Liu, Ting & Wang, Tao, 2018. "Information Acquisition, signaling and learning in duopoly," International Journal of Industrial Organization, Elsevier, vol. 61(C), pages 155-191.
    5. 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.
    6. Leister, C. Matthew, 2020. "Information acquisition and welfare in network games," Games and Economic Behavior, Elsevier, vol. 122(C), pages 453-475.
    7. Jihad C. Elnaboulsi & Wassim Daher & Yiğit Sağlam, 2023. "Environmental taxation, information precision, and information sharing," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 25(2), pages 301-341, April.

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