IDEAS home Printed from https://ideas.repec.org/p/iek/wpaper/1609.html
   My bibliography  Save this paper

To spy or not to (fire the) spy: The benefits of acquiring information about rivals¡¯ play in Bertrand competition

Author

Listed:
  • Cuihong Fan

    () (Shanghai University of Finance and Economics)

  • Byoung Heon Jun

    () (Korea University, Seoul)

  • Elmar G. Wolfstetter

    () (Humboldt-University at Berlin and Korea University, Seoul)

Abstract

The present paper explores the impact of planting a spy in a competing firm who discloses operational information about pricing in a Bertrand market game with differentiated products under incomplete information. The results depend upon whether the presence of the spy is common knowledge and whether the identity of the spy has been disclosed. Altogether, spying may benefit both the spying and the spied at firm. Although the spied at firm would prefer not to be spied at if its cost is low, firing the spy, which is an option if the spy¡¯s identity has been disclosed, adversely affects beliefs and is never profitable.

Suggested Citation

  • Cuihong Fan & Byoung Heon Jun & Elmar G. Wolfstetter, 2016. "To spy or not to (fire the) spy: The benefits of acquiring information about rivals¡¯ play in Bertrand competition," Discussion Paper Series 1609, Institute of Economic Research, Korea University.
  • Handle: RePEc:iek:wpaper:1609
    as

    Download full text from publisher

    File URL: http://econ.korea.ac.kr/~ri/WorkingPapers/w1609.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Amir, Rabah & Stepanova, Anna, 2006. "Second-mover advantage and price leadership in Bertrand duopoly," Games and Economic Behavior, Elsevier, vol. 55(1), pages 1-20, April.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Industrial espionage; price leadership; collusion; antitrust policy; incomplete information;

    JEL classification:

    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • 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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iek:wpaper:1609. 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: (Kim, Jisoo). General contact details of provider: http://edirc.repec.org/data/ierkukr.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.