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Cournot oligopoly with information sharing

Li, Lode (1985) Cournot oligopoly with information sharing. RAND Journal of Economics, 16 (4). pp. 521-536. ISSN 0741-6261. http://resolver.caltech.edu/CaltechAUTHORS:20171113-155519767

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Abstract

This article examines the incentives for Cournot oligopolists to share information about a common parameter or about firm-specific parameters. We assume that the private information that firms receive has equal accuracy and obeys a linear conditional expectation property. We find that when the uncertainty is about a firm-specific parameter, perfect revelation is the unique equilibrium. When the uncertainty is about a common parameter, no information sharing is the unique equilibrium. But the nonpooling equilibrium converges to the situation where the pooling strategies are adopted as the total amount of information increases. Hence, the efficiency is achieved in the competitive equilibrium as the number of firms becomes large.


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Additional Information:© 1985 RAND Corporation. I gratefully acknowledge the referees' suggestions and the Associate Editor's detailed comments, which improved the article and clarified the exposition substantially. I completed this article when I was at Caltech. Leonid Hurwicz, Morton Kamien, Richard McKelvey, and Talbot Page also provided helpful comments. Formerly SSWP 561.
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Deposited By: Jacquelyn Bussone
Deposited On:15 Nov 2017 23:44
Last Modified:15 Nov 2017 23:44

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