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

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Author Info
Eliane Catilina (Washington and Lee University)

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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\222 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\222 profits. However, I will argue that by adding natural assumptions on oligopolists\222 behavior, I can offer a model that provides a better description of firms\222 actions and trade\226offs than the standard view. Keywords: Information Acquisition, Cournot Markets, Subgame Perfect Nash equilibrium, Strong Nash Equilibrium.

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Paper provided by EconWPA in its series Game Theory and Information with number 0205005.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 43 pages
Date of creation: 05 Mar 2002
Date of revision:
Handle: RePEc:wpa:wuwpga:0205005

Note: Type of Document - pdf; pages: 43
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Web page: http://129.3.20.41

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Related research
Keywords: Information Acquistion; Cournot Market; Strong Nash Equilibrium;

Find related papers by JEL classification:
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information

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References listed on IDEAS
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  1. Esther Hauk & Sjaak Hurkens, 1996. "Secret Information Acquisition in Cournot Markets," Economics Working Papers 233, Department of Economics and Business, Universitat Pompeu Fabra, revised Aug 1997. [Downloadable!]
  2. Gal-Or, Esther, 1986. "Information Transmission-Cournot and Bertrand Equilibria," Review of Economic Studies, Blackwell Publishing, vol. 53(1), pages 85-92, January. [Downloadable!] (restricted)
  3. Raith, Michael, 1996. "A General Model of Information Sharing in Oligopoly," Journal of Economic Theory, Elsevier, vol. 71(1), pages 260-288, October. [Downloadable!] (restricted)
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  4. Vives, Xavier, 1988. "Aggregation of Information in Large Cournot Markets," Econometrica, Econometric Society, vol. 56(4), pages 851-76, July. [Downloadable!] (restricted)
  5. Paul Milgrom & John Roberts, 1986. "Relying on the Information of Interested Parties," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 18-32, Spring. [Downloadable!] (restricted)
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  6. Xavier Vives, 1990. "Trade Association Disclosure Rules, Incentives to Share Information, and Welfare," RAND Journal of Economics, The RAND Corporation, vol. 21(3), pages 409-430, Autumn. [Downloadable!] (restricted)
  7. Vives, Xavier, 1984. "Duopoly information equilibrium: Cournot and bertrand," Journal of Economic Theory, Elsevier, vol. 34(1), pages 71-94, October. [Downloadable!] (restricted)
  8. Lode Li, 1985. "Cournot Oligopoly with Information Sharing," RAND Journal of Economics, The RAND Corporation, vol. 16(4), pages 521-536, Winter. [Downloadable!] (restricted)
  9. Gal-Or, Esther, 1985. "Information Sharing in Oligopoly," Econometrica, Econometric Society, vol. 53(2), pages 329-43, March. [Downloadable!] (restricted)
  10. Paul R. Milgrom, 1981. "Good News and Bad News: Representation Theorems and Applications," Bell Journal of Economics, The RAND Corporation, vol. 12(2), pages 380-391, Autumn. [Downloadable!] (restricted)
    Other versions:
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