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The Effects of Disclosure Regulation of an Innovative Firm

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  • Jos Jansen

Abstract

A firm actively manages its rival’s beliefs by disclosing and concealing information on the size of its process innovation. The firm’s disclosure strategy results from the trade-off between two effects on product market incentives. First, the firm’s competitor learns that the firm is efficient, which discourages the competitor. Second, the competitor becomes more efficient himself, since he can expropriate part of the disclosed knowledge, which encourages him. I characterize the equilibrium disclosure strategies for any knowledge spillover in a simple Cournot duopoly model, and illustrate the results graphically. Moreover, I compare the strategic disclosure equilibria with equilibria under non-strategic disclosure.

Suggested Citation

  • Jos Jansen, 2005. "The Effects of Disclosure Regulation of an Innovative Firm," CESifo Working Paper Series 1459, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_1459
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    File URL: http://www.cesifo-group.de/DocDL/cesifo1_wp1459.pdf
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    References listed on IDEAS

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    Cited by:

    1. Dedman, Elisabeth & Lennox, Clive, 2009. "Perceived competition, profitability and the withholding of information about sales and the cost of sales," Journal of Accounting and Economics, Elsevier, vol. 48(2-3), pages 210-230, December.
    2. Martin Gonzalez Eiras & Dirk Niepelt, 2004. "Sustaining Social Security," Working Papers 72, Universidad de San Andres, Departamento de Economia, revised Jun 2004.

    More about this item

    Keywords

    process innovation; Cournot competition; strategic substitutes; information disclosure; knowledge spillovers;

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