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Welfare Effects of Endogenous Information Acquisition and Disclosure in Duopoly Markets

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  • Kazunori Miwa

Abstract

This paper investigates the interaction between firms' information acquisition decisions and disclosure of internally acquired information in a Cournot duopoly market under demand uncertainty. The main results are as follows. When the correlation between firms' demands is positive and sufficiently high, disclosure of information on demand uncertainty can enhance social welfare, given that the quality of firms' private information is constant. However, in the setting where firms' private information is endogenously determined, mandatory disclosure is not always desirable. This is because, when disclosure is mandated, firms acquire less precise information compared with the case where the acquired information is not disclosed; hence, their internal information environments are deteriorated. This can lead to unintended consequences such that disclosure regulation decreases social welfare.

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  • Kazunori Miwa, 2019. "Welfare Effects of Endogenous Information Acquisition and Disclosure in Duopoly Markets," European Accounting Review, Taylor & Francis Journals, vol. 28(5), pages 1011-1026, October.
    • Handle: RePEc:taf:euract:v:28:y:2019:i:5:p:1011-1026
    DOI: 10.1080/09638180.2019.1615969
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    Cited by:

    1. Kazunori Miwa, 2021. "An Experimental Study on Information Acquisition and Disclosure in a Cournot Duopoly Market," Discussion Papers in Economics and Business 13-01-Rev, Osaka University, Graduate School of Economics.
    2. Yin, Xundong & Wang, Sophie Xuefei & Lu, Yuanzhu & Yan, Jianye, 2023. "Endogenous information acquisition and disclosure of private information in a duopoly," Economic Modelling, Elsevier, vol. 126(C).

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