Business intelligence and multi-market competition
We consider a multimarket framework where a set of firms compete on two oligopolistic markets. The cost of production of each firm allows for spillovers accross markets, ensuring that output decisions for both markets have to be made jointly. Prior to competing in these markets, firms can establish links gathering business intelligence about other firms. These links have two effects. First, the quality of the good produced by the firm which forms the link increases. Second, the quality of the good of the firm which receives the link decreases. We characterize the business intelligence equilibrium networks and networks that maximize social welfare under the most interesting scenario of diseconomies of scope. We that due to externalities, the equilibrium networks may be over-connected relative to socially optimal networks creating a role for policy intervention. We also find that in some situations firms may refrain from gathering information, even if it is costlesss. Moreover, even though intelligence gathering leads to increased product quality, there exist situations where it is detrimental to both consumer welfare and social welfare.
|Date of creation:||2013|
|Date of revision:|
|Contact details of provider:|| Postal: 1241 rue des Résidences, Domaine Universitaire, 38400 Saint Martin d'Hères|
Phone: (0033) 4 76 82 54 39
Web page: http://www.grenoble.inra.fr/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Goyal, Sanjeev & Joshi, Sumit, 2003.
"Networks of collaboration in oligopoly,"
Games and Economic Behavior,
Elsevier, vol. 43(1), pages 57-85, April.
- Goyal, S. & Joshi, S., 2000. "Networks of Collaboration in Oligopoly," Econometric Institute Research Papers EI 9952-/A, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
- Sumit Joshi, 2000. "Networks of Collaboration in Oligopoly," Econometric Society World Congress 2000 Contributed Papers 0623, Econometric Society.
- Matthew O. Jackson & Asher Wolinsky, 1994.
"A Strategic Model of Social and Economic Networks,"
1098, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Billand, P. & Bravard, C., 2004. "Non-cooperative networks in oligopolies," International Journal of Industrial Organization, Elsevier, vol. 22(5), pages 593-609, May.
- B. Douglas Bernheim & Michael D. Whinston, 1990. "Multimarket Contact and Collusive Behavior," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 1-26, Spring.
- Crane, Andrew, 2005. "In the company of spies: When competitive intelligence gathering becomes industrial espionage," Business Horizons, Elsevier, vol. 48(3), pages 233-240.
- Hackner, Jonas, 2000.
"A Note on Price and Quantity Competition in Differentiated Oligopolies,"
Journal of Economic Theory,
Elsevier, vol. 93(2), pages 233-239, August.
- Häckner, Jonas, 1999. "A Note on Price and Quantity Competition in Differentiated Oligopolies," Research Papers in Economics 1999:9, Stockholm University, Department of Economics.
- Bulow, Jeremy I & Geanakoplos, John D & Klemperer, Paul D, 1985. "Multimarket Oligopoly: Strategic Substitutes and Complements," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 488-511, June.
- Francis Bloch, 1995. "Endogenous Structures of Association in Oligopolies," RAND Journal of Economics, The RAND Corporation, vol. 26(3), pages 537-556, Autumn.
When requesting a correction, please mention this item's handle: RePEc:gbl:wpaper:2013-04. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Agnès Vertier)
If references are entirely missing, you can add them using this form.