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Spying in Multi-market Oligopolies

Author

Listed:
  • Pascal Billand

    (CREUSET, Jean Monnet University)

  • Christophe Bravard

    (CREUSET, Jean Monnet University)

  • Subhadip Chakrabarti

    (School of Management and Economics, Queen’s University Belfast)

  • Sudipta Sarangi

    (DIW Berlin and Department of Economics, Louisiana State University)

Abstract

We consider a multimarket framework where a set of firms compete on two interrelated oligopolistic markets. Prior to competing in these markets, firms can spy on others in order to increase the quality of their product. We characterize the equilibrium espionage networks and networks that maximize social welfare under the most interesting scenario of diseconomies of scope. We find that in some situations firms may refrain from spying even if it is costless. Moreover, even though spying leads to increased product quality, there exist situations where it is detrimental to both consumer welfare and social welfare.

Suggested Citation

  • Pascal Billand & Christophe Bravard & Subhadip Chakrabarti & Sudipta Sarangi, 2010. "Spying in Multi-market Oligopolies," Working Papers 2010.117, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2010.117
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    References listed on IDEAS

    as
    1. Goyal, Sanjeev & Joshi, Sumit, 2003. "Networks of collaboration in oligopoly," Games and Economic Behavior, Elsevier, vol. 43(1), pages 57-85, April.
    2. Billand, P. & Bravard, C., 2004. "Non-cooperative networks in oligopolies," International Journal of Industrial Organization, Elsevier, vol. 22(5), pages 593-609, May.
    3. Xavier Vives, 2001. "Oligopoly Pricing: Old Ideas and New Tools," MIT Press Books, The MIT Press, edition 1, volume 1, number 026272040x, January.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Alex Barrachina, 2016. "Entry under an information-gathering monopoly," Working Papers 2016/09, Economics Department, Universitat Jaume I, Castellón (Spain).
    2. Barrachina, Alex & Tauman, Yair & Urbano, Amparo, 2014. "Entry and espionage with noisy signals," Games and Economic Behavior, Elsevier, vol. 83(C), pages 127-146.
    3. Po-Lu Chen, 2016. "Cross-Country Economic Espionage and Investment in Research and Development," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 8(4), pages 146-155, April.
    4. Yair Tauman & Alex Barrachina, 2012. "Industrial Espionage with a Noisy Intelligence," Department of Economics Working Papers 12-06, Stony Brook University, Department of Economics.

    More about this item

    Keywords

    Oligopoly; Multimarket; Networks;

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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