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Preannouncing competitive decisions in oligopoly markets


  • Corona, Carlos
  • Nan, Lin


We examine a duopolistic setting in which firms can preannounce their future competitive decisions before they actually implement them. We show that there is a unique equilibrium in which both firms preannounce and overstate their future actions when uncertainty of demand is low. We find that firms choose higher real actions than the ones they would choose in the absence of preannouncements. Moreover, the real actions of both firms are single-peaked functions of their credibility. In a Cournot market, firms face a prisoner's dilemma in which preannouncing lowers firms' profits. If firms could commit not to preannounce, they would remain silent. In a Bertrand market, firms overstate their future actions to foster collusion.

Suggested Citation

  • Corona, Carlos & Nan, Lin, 2013. "Preannouncing competitive decisions in oligopoly markets," Journal of Accounting and Economics, Elsevier, vol. 56(1), pages 73-90.
  • Handle: RePEc:eee:jaecon:v:56:y:2013:i:1:p:73-90 DOI: 10.1016/j.jacceco.2013.04.002

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    References listed on IDEAS

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    10. Arya, Anil & Mittendorf, Brian, 2007. "The interaction among disclosure, competition between firms, and analyst following," Journal of Accounting and Economics, Elsevier, vol. 43(2-3), pages 321-339, July.
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    13. repec:bla:joares:v:32:y:1994:i:2:p:224-240 is not listed on IDEAS
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    Cited by:

    1. Chen, Hui & Jorgensen, Bjorn, 2016. "Market exit through divestment: the effect of accounting bias on competition," LSE Research Online Documents on Economics 64217, London School of Economics and Political Science, LSE Library.
    2. Mark Bagnoli & Susan G. Watts, 2015. "Competitive intelligence and disclosure," RAND Journal of Economics, RAND Corporation, vol. 46(4), pages 709-729, October.
    3. Chen, Gang & Rytter, Niels G.M. & Jiang, Liping & Nielsen, Peter & Jensen, Lars, 2017. "Pre-announcements of price increase intentions in liner shipping spot markets," Transportation Research Part A: Policy and Practice, Elsevier, vol. 95(C), pages 109-125.
    4. Kazunori Miwa, 2016. "Welfare Effects of Endogenous Information Acquisition and Disclosure in Duopoly Markets," Discussion Paper Series DP2016-17, Research Institute for Economics & Business Administration, Kobe University.


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