Incomplete Information in Cournot Oligopoly: The Case of Unknown Production Capacities
A Cournot oligopoly in which firms face incomplete information with respect to production capacities is studied. For the case where the firms’ capacities are stochastically independent, the functional form of equilibrium strategies is derived. If inverse demand is concave, a unique symmetric equilibrium exists, and if demand is linear, then every equilibrium is symmetric. In the case of duopoly, the impact on social welfare when firms commit ex-ante on exchanging information is analyzed. Sharing information increases expected output and social welfare in a large class of models. If the demand intercept is sufficiently large, sharing information increases producer surplus and decreases consumer surplus (and vice versa).
|Date of creation:||10 Jan 2013|
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- Einy, Ezra & Haimanko, Ori & Moreno, Diego & Shitovitz, Benyamin, 2008.
"On the Existence of Bayesian Cournot Equilibrium,"
2008-11, Graduate School of Economics, Hitotsubashi University.
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- Ezra Einy & Ori Haimanko & Diego Moreno & Benyamin Shitovitz, 2007. "On the Existence of Bayesian Cournot Equilibrium," Working Papers 0715, Ben-Gurion University of the Negev, Department of Economics.
- Ezra Einy & Ori Haimanko & Diego Moreno & Benyamin Shitovitz, 2007. "On the Existence of Bayesian Cournot Equilibrium," Working Papers 0702, Ben-Gurion University of the Negev, Department of Economics.
- John C Harsanyi, 1997. "Games with incomplete information played by "bayesian" players," Levine's Working Paper Archive 1175, David K. Levine.
- Vives, Xavier, 1984. "Duopoly information equilibrium: Cournot and bertrand," Journal of Economic Theory, Elsevier, vol. 34(1), pages 71-94, October.
- Einy, Ezra & Moreno, Diego & Shitovitz, Benyamin, 2002. "Information Advantage in Cournot Oligopoly," Journal of Economic Theory, Elsevier, vol. 106(1), pages 151-160, September.
- Raith, Michael, 1996. "A General Model of Information Sharing in Oligopoly," Journal of Economic Theory, Elsevier, vol. 71(1), pages 260-288, October.
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