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Information Acquisition with Endogenously Determined Cost in Cournot Markets with Stochastic Demand

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  • Catilina, Eliane

Abstract

This paper presents a model of information acquisition in Cournot Market with stochastic demand where the acquisition cost is endogenously determined. The novelty is to consider the possibility of cost reducing alliances to be formed in the first-stage of a two-stage acquisition game. This paper encompasses the main assumptions found in the current literature on information acquisition regarding the role of information and how it affects firms’ profits in a two stage the game. However, we argue that by adding natural assumptions regarding the choices and trade-offs between cost reduction and loss of strategic value we provide a better prediction for the outcome of information acquisition games and welfare implications.

Suggested Citation

  • Catilina, Eliane, 2019. "Information Acquisition with Endogenously Determined Cost in Cournot Markets with Stochastic Demand," MPRA Paper 93896, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:93896
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    References listed on IDEAS

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    More about this item

    Keywords

    Information acquisition; Cost Sharing Alliances; Information Asymmetry; Strong Nash Equilibrium.;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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