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Corporate Espionage

Author

Listed:
  • Pascal Billand
  • Christophe Bravard
  • Subhadip Chakrabarti
  • Sudipta Sarangi

Abstract

We consider a multimarket framework where a set of firms compete on two interrelated oligopolistic markets. Prior to competing in these markets, firms can spy on others in order to increase the quality of their product. We characterize the equilibrium espionage networks and networks that maximize social welfare under the most interesting scenario of diseconomies of scope. We find that in some situations firms may refrain from spying even if it is costless. Moreover, even though spying leads to increased product quality, there exist situations where it is detrimental to both consumer welfare and social welfare.

Suggested Citation

  • Pascal Billand & Christophe Bravard & Subhadip Chakrabarti & Sudipta Sarangi, 2009. "Corporate Espionage," Discussion Papers of DIW Berlin 854, DIW Berlin, German Institute for Economic Research.
    • Handle: RePEc:diw:diwwpp:dp854
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    File URL: https://www.diw.de/documents/publikationen/73/diw_01.c.94283.de/dp854.pdf
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    Cited by:

    1. Billand, Pascal & Bravard, Christophe & Chakrabarti, Subhadip & Sarangi, Sudipta, 2010. "Networks of Collaboration in Multi-market Oligopolies," MPRA Paper 28188, University Library of Munich, Germany.

    More about this item

    Keywords

    Oligopoly; multimarket; networks;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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