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Strategic Disclosure of Demand Information by Duopolists: Theory and Experiment

Author

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  • Jos Jansen

    () (Aarhus Universtity and Max Planck Institute for Research on Collective Goods)

  • Andreas Pollak

    () (University of Cologne)

Abstract

We study the strategic disclosure of demand information and product-market strategies of duopolists. In a setting where both firms receive information with some probability, we show that firms selectively disclose information in equilibrium in order to influence their competitor’s product-market strategy. Subsequently, we analyze the firms’ behavior in a laboratory experiment. We find that subjects often use selective disclosure strategies, and this finding appears to be robust to changes in the information structure, the mode of competition, and the degree of product differentiation. Moreover, in our experiment, subjects’ product-market conduct is largely consistent with theoretical predictions.

Suggested Citation

  • Jos Jansen & Andreas Pollak, 2015. "Strategic Disclosure of Demand Information by Duopolists: Theory and Experiment," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2015_09, Max Planck Institute for Research on Collective Goods.
  • Handle: RePEc:mpg:wpaper:2015_09
    as

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    File URL: http://www.coll.mpg.de/pdf_dat/2015_09online.pdf
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    References listed on IDEAS

    as
    1. Till Requate & Israel Waichman, 2011. "“A profit table or a profit calculator?” A note on the design of Cournot oligopoly experiments," Experimental Economics, Springer;Economic Science Association, vol. 14(1), pages 36-46, March.
    2. Jos Jansen, 2008. "Information Acquisition and Strategic Disclosure in Oligopoly," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 17(1), pages 113-148, March.
    3. Uri Gneezy, 2005. "Deception: The Role of Consequences," American Economic Review, American Economic Association, vol. 95(1), pages 384-394, March.
    4. Benndorf, Volker & Kübler, Dorothea & Normann, Hans-Theo, 2015. "Privacy concerns, voluntary disclosure of information, and unraveling: An experiment," European Economic Review, Elsevier, vol. 75(C), pages 43-59.
    5. Ackert, Lucy F. & Church, Bryan K. & Sankar, Mandira Roy, 2000. "Voluntary disclosure under imperfect competition: experimental evidence," International Journal of Industrial Organization, Elsevier, vol. 18(1), pages 81-105, January.
    6. Paul Milgrom & John Roberts, 1986. "Relying on the Information of Interested Parties," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 18-32, Spring.
    7. Ginger Zhe Jin & Michael Luca & Danie lMartin, 2015. "Is No News (Perceived as) Bad News? An Experimental Investigation of Information Disclosure," Harvard Business School Working Papers 15-078, Harvard Business School, revised Aug 2016.
    8. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
    9. Ginger Zhe Jin & Michael Luca & Daniel Martin, 2015. "Is No News (Perceived as) Bad News? An Experimental Investigation of Information Disclosure," NBER Working Papers 21099, National Bureau of Economic Research, Inc.
    10. Hwang, Hae-shin, 1994. "Heterogeneity and the Incentive to Share Information in Cournot Oligopoly Market," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 35(2), pages 329-345, May.
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    More about this item

    Keywords

    common value; product differentiation; Asymmetry; Duopoly; information disclosure; skewed distribution; Incomplete Information; laboratory experiment; Cournot competition; Bertrand competition;

    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
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • M4 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting

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