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Contracting in a market with differential information

Author

Listed:
  • Rocha, M.
  • Greve, T.

Abstract

This Consider an oligopolistic industry where two firms have access to the same technology and compete in prices, but one firm has access to better information about the customers in the market. We assume that better information allows the better informed firm to attract specific customers. The better informed firm obtains a first customer contact advantage, whereas the uninformed firm can only offer a menu of prices without being able to pre-identify the types of customers. We show that better information does not lead to higher profit.

Suggested Citation

  • Rocha, M. & Greve, T., 2016. "Contracting in a market with differential information," Cambridge Working Papers in Economics 1657, Faculty of Economics, University of Cambridge.
  • Handle: RePEc:cam:camdae:1657
    Note: tg336
    as

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    File URL: http://www.econ.cam.ac.uk/research-files/repec/cam/pdf/cwpe1657.pdf
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    References listed on IDEAS

    as
    1. Chokler, Adi & Hon-Snir, Shlomit & Kim, Moshe & Shitovitz, Benyamin, 2006. "Information disadvantage in linear Cournot duopolies with differentiated products," International Journal of Industrial Organization, Elsevier, vol. 24(4), pages 785-793, July.
    2. repec:spr:lnecms:978-3-540-70876-6 is not listed on IDEAS
    3. Montes, Rodrigo & Sand-Zantman, Wilfried & Valletti, Tommaso M., 2015. "The value of personal information in markets with endogenous privacy," IDEI Working Papers 851, Institut d'Économie Industrielle (IDEI), Toulouse.
    4. Esteves, Rosa-Branca, 2010. "Pricing with customer recognition," International Journal of Industrial Organization, Elsevier, vol. 28(6), pages 669-681, November.
    5. Montes, Rodrigo & Sand-Zantman, Wilfried & Valletti, Tommaso M., 2015. "The value of personal information in online markets with endogenous privacy," TSE Working Papers 15-583, Toulouse School of Economics (TSE), revised May 2017.
    6. Brophy Haney, A. & Jamasb, T. & Pollitt, M.G., 2009. "Smart Metering and Electricity Demand: Technology, Economics and International Experience," Cambridge Working Papers in Economics 0905, Faculty of Economics, University of Cambridge.
    7. Taylor, Curtis & Wagman, Liad, 2014. "Consumer privacy in oligopolistic markets: Winners, losers, and welfare," International Journal of Industrial Organization, Elsevier, vol. 34(C), pages 80-84.
    Full references (including those not matched with items on IDEAS)

    More about this item

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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