Sharing Firm-Specific Information: Incentives and Welfare Effects

27 Pages Posted: 24 Jun 2009

See all articles by Rabah Amir

Rabah Amir

University of Arizona - Department of Economics; University of Arizona

Jim Y. Jin

University of St. Andrews - School of Management

Michael Troege

ESCP-Europe

Date Written: March 7, 2008

Abstract

The paper derives clear-cut and robust conclusions on the effects of sharing firm-specific information in general linear oligopoly. In Cournot (Bertrand) oligopoly, revealing (concealing) firm-specific cost information is the dominant strategy for each firm. In both competition modes firms have incentives to share firm-specific demand information. Sharing firm-specific cost information always hurts consumers but is socially beneficial in Cournot oligopoly and socially harmful in Bertrand oligopoly. Sharing firm-specific demand information also hurts consumers but increases welfare. Contrary to most existing results these findings are independent of distributional assumptions on costs and signals and hold for general asymmetric oligopoly with any mixture of substitute, complementary and independent goods.

Keywords: information sharing, cost uncertainty, firm-specific information, benchmarking

JEL Classification: D82, L13, L41

Suggested Citation

Amir, Rabah and Jin, Jim Y. and Troege, Michael, Sharing Firm-Specific Information: Incentives and Welfare Effects (March 7, 2008). Available at SSRN: https://ssrn.com/abstract=1424584 or http://dx.doi.org/10.2139/ssrn.1424584

Rabah Amir

University of Arizona - Department of Economics ( email )

Tucson, AZ 85721
United States

University of Arizona ( email )

Department of History
Tucson, AZ 85721
United States

Jim Y. Jin

University of St. Andrews - School of Management ( email )

The Gateway
Gateway
St. Andrews, Fife KY16 9SS
United Kingdom

Michael Troege (Contact Author)

ESCP-Europe ( email )

79, Avenue de Republique
75543 Paris, Cedex 11, 75011
France
33/149232601 (Phone)

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