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The Strategic Role of Information on the Demand Function in an Oligopolistic Market

Author

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  • Jean-Pierre Ponssard

    (Centre de Recherche en Gestion, Ecole Polytechnique, France)

Abstract

This paper investigates the incentives for cooperation in market surveys among competitive firms. The analysis relies on a game theoretic model. The main conclusion is that the value of information in a competitive market exhibits a sharp decrease as the number of firms that share the information increases. Thus, the advantage obtained through sharing the cost of a market survey may be upset by the loss due to the spreading of information among the competitors. The consumer's point of view is also studied showing that market surveys are advantageous in terms of consumer surplus, a usual indicator of the consumer's satisfaction.

Suggested Citation

  • Jean-Pierre Ponssard, 1979. "The Strategic Role of Information on the Demand Function in an Oligopolistic Market," Management Science, INFORMS, vol. 25(3), pages 243-250, March.
  • Handle: RePEc:inm:ormnsc:v:25:y:1979:i:3:p:243-250
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    File URL: http://dx.doi.org/10.1287/mnsc.25.3.243
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    References listed on IDEAS

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    6. N/A, 1962. "Summary," National Institute Economic Review, National Institute of Economic and Social Research, vol. 22(1), pages 3-3, November.
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    Citations

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    Cited by:

    1. Lagerlof, Johan N.M., 2007. "Insisting on a non-negative price: Oligopoly, uncertainty, welfare, and multiple equilibria," International Journal of Industrial Organization, Elsevier, vol. 25(4), pages 861-875, August.
    2. Arturs Kalnins, 2006. "Markets: The U.S. Lodging Industry," Journal of Economic Perspectives, American Economic Association, vol. 20(4), pages 203-218, Fall.
    3. Hurkens, Sjaak & Vulkan, Nir, 2006. "Endogenous private information structures," European Economic Review, Elsevier, vol. 50(1), pages 35-54, January.
    4. Jiang, Yingying & Yoneyama, Takau, 2008. "Economic conditions on exchange of technology and information : cournot's model applied to demand information risk in China," Hitotsubashi Journal of commerce and management, Hitotsubashi University, vol. 42(1), pages 17-28, January.
    5. Christophe Caron & Thierry Lafay, 2008. "How Risk Disciplines Pre-Commitment," Theory and Decision, Springer, pages 205-226.
    6. Christophe Caron & Thierry Lafay, 2008. "How Risk Disciplines Pre-Commitment," Theory and Decision, Springer, pages 205-226.
    7. Rafael, MONER-COLONQUES & Vicente, ORTS & José J., SEMPERE-MONERRIS, 2003. "The Strategic Role of Information Asymmetry on Demand for the Multinational Enterprise," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2003002, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    8. Esther Hauk & Sjaak Hurkens, 2001. "Secret information acquisition in Cournot markets," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), pages 661-681.
    9. Hurkens, Sjaak & Vulkan, Nir, 2001. "Information acquisition and entry," Journal of Economic Behavior & Organization, Elsevier, vol. 44(4), pages 467-479, April.
    10. Güth, Sandra & Güth, Werner & Müller, Wieland, 2000. "Private information, risk aversion, and the evolution of market research," SFB 373 Discussion Papers 2000,113, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
    11. Jean J. Gabszewicz & Jacques-François Thisse, 2000. "Microeconomic theories of imperfect competition," Cahiers d'Économie Politique, Programme National Persée, vol. 37(1), pages 47-99.
    12. Einy, Ezra & Moreno, Diego & Shitovitz, Benyamin, 2003. "The value of public information in a Cournot duopoly," Games and Economic Behavior, Elsevier, vol. 44(2), pages 272-285, August.
    13. MortonI. Kamien, 1987. "The Value of Infommation in a Strategic Conflict," Discussion Papers 717, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    14. Yasuhiro Sakai, 2016. "Information Exchanges among Firms and Their Welfare Implications (Part 1) : The Dual Relations between the Cournot and Bertrand Models," Discussion Papers CRR Discussion Paper Series A: General 16, Shiga University, Faculty of Economics,Center for Risk Research.
    15. Sjaak Hurkens & Nir Vulkan, 1999. "Endogenous information structures," Economics Working Papers 386, Department of Economics and Business, Universitat Pompeu Fabra.
    16. 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.
    17. Tapan Biswas & Jolian McHardy, 2010. "Strategic behaviour of firms in a duopoly and the impact of extending the patenting period," Working Papers 2010014, The University of Sheffield, Department of Economics.
    18. Yasuhiro Sakai, 2016. "Information Exchanges among Firms and Their Welfare Implications (Part 3 j : Private Risks and Oligopoly Models," Discussion Papers CRR Discussion Paper Series A: General 18, Shiga University, Faculty of Economics,Center for Risk Research.
    19. Eliane Catilina, 2002. "Information Acquisition in Cournot Markets: An (enhanced) two- Stage Approach," Game Theory and Information 0205005, EconWPA.
    20. Kloosterman, Andrew, 2015. "Public information in Markov games," Journal of Economic Theory, Elsevier, vol. 157(C), pages 28-48.
    21. Yasuhiro Sakai & Akihiko Yoshizumi, 1991. "The impact of risk aversion on information transmission between firms," Journal of Economics, Springer, vol. 53(1), pages 51-73, February.
    22. Alberto Huidobro, 2014. "Differences between loans granted by commercial and development banks: A cross-sectional analysis of interest rate margins," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 29(2), pages 163-224.

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