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Information quality choice and information disclosure in oligopoly

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  • Gong, Yaxian

Abstract

In this paper, we provide a framework to analyze the information disclosure and information quality choice in the oligopoly in which one firm has the opportunity to choose her information quality flexibly and then decide her information disclosure rule after she has observed her information.We find that in the Cournot (Bertrand)competition, when the goods are substitutes (complements) and the degree of substitution (complement) is small enough, the firm will choose the maximal information quality. However, if the degree of substitution (complement) is large enough, the information quality is some intermediate value. On the other hand, in the Cournot (Bertrand) competition, when the goods are complements (substitutes), the maximal information quality will be chosen. We also find that the Fully Revealing case in which the probability of information disclosure is one will occur in (i) the Cournot competition with sufficiently small degree of substitution; (ii) the Cournot competition when goods are complements; (iii) the Bertrand competition when goods are substitutes; (iv) the Bertrand competition with sufficiently small degree of complements. Moreover, we show that the No Revealing case in which the probability of information disclosure is zero will never show up.

Suggested Citation

  • Gong, Yaxian, 2019. "Information quality choice and information disclosure in oligopoly," Research in Economics, Elsevier, vol. 73(3), pages 216-224.
    • Handle: RePEc:eee:reecon:v:73:y:2019:i:3:p:216-224
    DOI: 10.1016/j.rie.2019.07.002
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    References listed on IDEAS

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    1. Dye, Ra, 1985. "Disclosure Of Nonproprietary Information," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 23(1), pages 123-145.
    2. Gal-Or, Esther, 1985. "Information Sharing in Oligopoly," Econometrica, Econometric Society, vol. 53(2), pages 329-343, March.
    3. Emir Kamenica & Matthew Gentzkow, 2011. "Bayesian Persuasion," American Economic Review, American Economic Association, vol. 101(6), pages 2590-2615, October.
    4. Dye, Ronald A. & Hughes, John S., 2018. "Equilibrium voluntary disclosures, asset pricing, and information transfers," Journal of Accounting and Economics, Elsevier, vol. 66(1), pages 1-24.
    5. Crawford, Vincent P & Sobel, Joel, 1982. "Strategic Information Transmission," Econometrica, Econometric Society, vol. 50(6), pages 1431-1451, November.
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    Cited by:

    1. Xia, Dan & Wang, Xiang-Qian, 2021. "The synergetic impact of environmental and innovation information disclosure on corporate financial performance: An empirical study based on China coal listed companies," Technovation, Elsevier, vol. 100(C).

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    Keywords

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    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D89 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Other

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