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Information Acquisition in Cournot Markets: An (enhanced) two- Stage Approach

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  • Eliane Catilina

    (Washington and Lee University)

Abstract

This paper presents an alternative or enhanced approach to information acquisition in Cournot markets with stochastic demand in which the cost of information acquisition is endogenously determined by firms' information purchasing strategy. I propose a two-stage model in which in the first stage each firm decides whether it will join a coalition to purchase information and therefore share the cost of information acquisition, to individually purchase information, or to remain uninformed. In the second-stage firms engage in Cournot competition to choose output. The model I propose encompasses the main assumptions of the current view on information acquisition, mainly those related to the role of information and how it affects firms' profits. However, I will argue that by adding natural assumptions on oligopolists' behavior, I can offer a model that provides a better description of firms' actions and trade-offs than the standard view. Keywords: Information Acquisition, Cournot Markets, Subgame Perfect Nash equilibrium, Strong Nash Equilibrium.

Suggested Citation

  • Eliane Catilina, 2002. "Information Acquisition in Cournot Markets: An (enhanced) two- Stage Approach," Game Theory and Information 0205005, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpga:0205005
    Note: Type of Document - pdf; pages: 43
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Information Acquistion; Cournot Market; Strong Nash Equilibrium;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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