Bilateral Information Sharing in Oligopoly

21 Pages Posted: 16 Oct 2007

See all articles by Sergio Currarini

Sergio Currarini

University of Leicester - Department of Economics; Ca Foscari University of Venice - Dipartimento di Economia

Francesco Feri

University of London

Date Written: October 2007

Abstract

We study the problem of information sharing in oligopoly, when sharing decisions are taken before the realization of private signals. Using the general model developed by Raith (1996), we show that if firms are allowed to make bilateral exclusive sharing agreements, then some degree of information sharing is consistent with equilibrium, and is a constant feature of equilibrium when the number of firms is not too small. Our result is to be contrasted with the traditional conclusion that no information is shared in common values situations with strategic substitutes - such as Cournot competition with demand shocks - when firms can only make industry-wide sharing contracts (e.g., a trade association).

Keywords: Information sharing, oligopoly, networks, Bayesian equilibrium

JEL Classification: D43, D82, D85, L13

Suggested Citation

Currarini, Sergio and Feri, Francesco, Bilateral Information Sharing in Oligopoly (October 2007). University Ca' Foscari of Venice, Dept. of Economics Research Paper No. 21/07. Available at SSRN: https://ssrn.com/abstract=1021651 or http://dx.doi.org/10.2139/ssrn.1021651

Sergio Currarini (Contact Author)

University of Leicester - Department of Economics ( email )

Department of Economics
Leicester LE1 7RH, Leicestershire LE1 7RH
United Kingdom

Ca Foscari University of Venice - Dipartimento di Economia ( email )

Cannaregio 873
Venice, 30121
Italy

Francesco Feri

University of London ( email )

Senate House
Malet Street
London, WC1E 7HU
United Kingdom

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