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Beyond the Need to Boast: Cost Concealment Incentives and Exit in Cournot Oligopoly

Author

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  • Jos Jansen

Abstract

This paper studies the incentives for production cost disclosure in an asymmetric Cournot oligopoly. Whereas the efficient firm (consumers) prefers information sharing (concealment) when the firms choose accommodating strategies in the product market, the firm (consumers) may prefer information concealment (sharing) when it can exclude its competitors from the market. Hence, the rankings of expected profit and consumer surplus can be reversed if exit of the inefficient firms is possible. Although the efficient firm has stronger incentives to share information when it shares strategically, there remain cases in which the firm conceals information in equilibrium to induce exit.

Suggested Citation

  • Jos Jansen, 2012. "Beyond the Need to Boast: Cost Concealment Incentives and Exit in Cournot Oligopoly," Working Paper Series in Economics 52, University of Cologne, Department of Economics.
  • Handle: RePEc:kls:series:0052
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    File URL: http://ockenfels.uni-koeln.de/fileadmin/wiso_fak/stawi-ockenfels/pdf/wp_series_download/wp0052.pdf
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    More about this item

    Keywords

    Cournot oligopoly; information disclosure; exit; cost asymmetry; precommitment;

    JEL classification:

    • 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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