Too Much Information Sharing? Welfare Effects of Sharing Acquired Cost Information in Oligopoly

38 Pages Posted: 22 Sep 2010

See all articles by Juan-José Ganuza

Juan-José Ganuza

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences

Jos Jansen

Universitat Pompeu Fabra - Department of Economics and Business

Date Written: September 2010

Abstract

By using general information structures and precision criteria based on the dispersion of conditional expectations, we study how oligopolists’ information acquisition decisions may change the effects of information sharing on the consumer surplus. Sharing information about individual cost parameters gives the following trade-off in Cournot oligopoly. On the one hand, it decreases the expected consumer surplus for a given information precision, as the literature shows. On the other hand, information sharing increases the firms’ incentives to acquire information, and the consumer surplus increases in the precision of the firms’ information. Interestingly, the latter effect may dominate the former effect.

Keywords: Oligopoly, information acquisition, information sharing, Information structures, Consumer surplus

JEL Classification: D82, L13, L40, D83

Suggested Citation

Ganuza, Juan and Jansen, Jos, Too Much Information Sharing? Welfare Effects of Sharing Acquired Cost Information in Oligopoly (September 2010). MPI Collective Goods Preprint, No. 2010/40, Available at SSRN: https://ssrn.com/abstract=1680271 or http://dx.doi.org/10.2139/ssrn.1680271

Juan Ganuza (Contact Author)

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain
(34-93) 542 27 19 (Phone)
(34-98) 542 17 46 (Fax)

Jos Jansen

Universitat Pompeu Fabra - Department of Economics and Business ( email )

Barcelona
Spain

HOME PAGE: http://sites.google.com/site/josjansenweb/

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