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Information Advantage in Cournot Oligopoly with Separable Information, or Nondifferentiable

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  • Haimanko, Ori
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    Abstract

    Einy et al (2002) showed that information advantage of a firm is rewarded in any equilibrium of an incomplete information Cournot oligopoly, provided the inverse demand function is differentiable and monotonically decreasing, and costs are affine. We extend this result in two directions. We show first that a firm receives not less than its rival even if that firm's information advantage is only regarding payoff-relevant data, and not necessarily payoff-irrelevant "sunspots". We then show that there is at least one equilibrium which rewards firm's information advantage even with non-differentiable, but concave, inverse demand function. Under certain conditions, these results hold even with always non-negative inverse demand functions.

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    File URL: http://hermes-ir.lib.hit-u.ac.jp/rs/bitstream/10086/17650/1/070econDP09-13.pdf
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    Bibliographic Info

    Paper provided by Graduate School of Economics, Hitotsubashi University in its series Discussion Papers with number 2009-13.

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    Length: 18p.
    Date of creation: Sep 2009
    Date of revision:
    Handle: RePEc:hit:econdp:2009-13

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    Related research

    Keywords: Oligopoly; Incomplete Information; Information advantage; Bayesian Cournot; Equilibrium; Sunspots; Non-differentiability; Inverse demand;

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    Cited by:
    1. Luo, Jianli, 2012. "Information acquisition under uncertainty: The case of labor-managed and profit-maximizing firms coexist," Economic Modelling, Elsevier, vol. 29(6), pages 2527-2532.

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