Spying in Multi-Market Oligopolies

34 Pages Posted: 18 Oct 2010

See all articles by Pascal Billand

Pascal Billand

Jean Monnet University

Christophe Bravard

Jean Monnet University, Saint-Etienne - CREUSET

Subhadip Chakrabarti

Queen's University Management School

Sudipta Sarangi

Virginia Polytechnic Institute & State University

Date Written: October 11, 2010

Abstract

We consider a multimarket framework where a set of firms compete on two interrelated oligopolistic markets. Prior to competing in these markets, firms can spy on others in order to increase the quality of their product. We characterize the equilibrium espionage networks and networks that maximize social welfare under the most interesting scenario of diseconomies of scope. We find that in some situations firms may refrain from spying even if it is costless. Moreover, even though spying leads to increased product quality, there exist situations where it is detrimental to both consumer welfare and social welfare.

Keywords: Oligopoly, Multimarket, Networks

JEL Classification: C70, L13, L20

Suggested Citation

Billand, Pascal and Bravard, Christophe and Chakrabarti, Subhadip and Sarangi, Sudipta, Spying in Multi-Market Oligopolies (October 11, 2010). FEEM Working Paper No. 117.2010, Available at SSRN: https://ssrn.com/abstract=1690452 or http://dx.doi.org/10.2139/ssrn.1690452

Pascal Billand (Contact Author)

Jean Monnet University ( email )

34, rue Francis Baulier
Saint-Etienne, 42023
France

Christophe Bravard

Jean Monnet University, Saint-Etienne - CREUSET ( email )

34, rue Francis Baulier
Saint-Etienne, 42023
France

Subhadip Chakrabarti

Queen's University Management School ( email )

25 University Square
Belfast, Northern Ireland BT7 1NN
Northern Ireland
+44 0 28 9097 3273 (Phone)

HOME PAGE: http://www.qub.ac.uk/schools/SchoolofManagementandEconomics/Staff/ChakrabartiSubhadip/

Sudipta Sarangi

Virginia Polytechnic Institute & State University ( email )

250 Drillfield Drive
Blacksburg, VA 24061
United States

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