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Cournot Oligopoly with Information Sharing

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  • Lode Li

Abstract

This article examines the incentives for Cournot oligopolists to share information about a common parameter or about firm-specific parameters. We assume that the private information that firms receive has equal accuracy and obeys a linear conditional expectation property. We find that when the uncertainty is about a firm-specific parameter, perfect revelation is the unique equilibrium. When the uncertainty is about a common parameter, no information sharing is the unique equilibrium. But the nonpooling equilibrium converges to the situation where the pooling strategies are adopted as the total amount of information increases. Hence, the efficiency is achieved in the competitive equilibrium as the number of firms becomes large.

Suggested Citation

  • Lode Li, 1985. "Cournot Oligopoly with Information Sharing," RAND Journal of Economics, The RAND Corporation, vol. 16(4), pages 521-536, Winter.
  • Handle: RePEc:rje:randje:v:16:y:1985:i:winter:p:521-536
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