The Effects of Disclosure Regulation of an Innovative Firm
AbstractA firm actively manages its rival’s beliefs by disclosing and concealing information on the size of its process innovation. The firm’s disclosure strategy results from the trade-off between two effects on product market incentives. First, the firm’s competitor learns that the firm is efficient, which discourages the competitor. Second, the competitor becomes more efficient himself, since he can expropriate part of the disclosed knowledge, which encourages him. I characterize the equilibrium disclosure strategies for any knowledge spillover in a simple Cournot duopoly model, and illustrate the results graphically. Moreover, I compare the strategic disclosure equilibria with equilibria under non-strategic disclosure.
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Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1459.
Date of creation: 2005
Date of revision:
process innovation; Cournot competition; strategic substitutes; information disclosure; knowledge spillovers;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-08-13 (All new papers)
- NEP-INO-2005-08-13 (Innovation)
- NEP-MIC-2005-08-13 (Microeconomics)
- NEP-REG-2005-08-13 (Regulation)
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