This article analyzes the duality of prices and quantities in a differentiated duopoly. It is shown that if firms can only make two types of binding contracts with consumers, the price contract and the quantity contract, it is a dominant strategy for each firm to choose the quantity (price) contract, provided the goods are substitutes (complements).

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In this article I propose a monopolistic competition framework to analyze the effects of different disclosure rules used by trade associations on the incentives to share information and on the welfare of consumers, firms, and society. This framework is appropriate whenever a single firm cannot irifluence aggregate market magnitudes, and serves as a benchmark for the analysis of information-pooling agreements abstracting from strategic considerations. 1 report two main results. First, a policy of nonexclusionary disclosure destroys the incentives to share information, while exclusionary disclosure preserves them. Second, information .sharing increases expected total surplus with Coumot competition but decreases it with Bertrand competition in the context ofa Quadratic-Normal model with demand uncertainty.

AGGREGATION OF INFORMATION IN LARGE COURNOT MARKETS BY XAVIER VIVES1 Consider a homogeneous product market where firms have private information about an uncertain demand parameter and compete in quantities. We examine the convergence properties of Bayesian-Cournot equilibria as the economy is replicated and conclude that large Cournot (or almost competitive) markets do not aggregate information efficiently except possibly when the production technology exhibits constant returns to scale. Even in a competitive market there is a welfare loss with respect to the first best outcome due to incomplete information in general. Nevertheless a competitive market is efficient, taking as given the decentralized private information structure of the economy. Endogenous (and costly) information acquisition is examined and seen to imply that the market outcome always falls short of the first best level with decreasing returns to scale. The results are also shown to be robust to the addition of extra rounds of competition which allows firms to use the information revealed by past prices. Explicit closed form solutions yielding comparative static results are obtained for models characterized by quadratic payoffs and affine information structures.

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A simple dynamic model of rational learning through market interaction by asymmetrically informed risk-neutral agents, uncertain about a valuation parameter but whose pooled information reveals it, is presented. The model is a variation of the classical partial equilibrium model of learning in rational expectations in which the market price is informative about the unknown parameter only through the actions of agents. It is found that learning from market prices and convergence to the rational expectations equilibrium is slow, at the rate 1/J;;l73 (where n is the number periods of market interaction), whenever the average precision of private information in the market is finite. Convergence obtains at the standard rate IjJ1i if there is a positive mass of perfectly informed agents. Comparative static results on more refined measures of the speed of convergence with respect to basic technological and informational parameters are also provided.

Consider a duopoly market in which consumers have heterogeneous information about the quality differential q of the two goods. When firms are ignorant about q, consumers rationally believe that a firm with a high market share is likely to produce a highquality good. As a result, firms try to signal-jam the inferences of consumers and compete for market shares beyond the level explained by short-run profit maximization. When firms know q, multiple equilibria may exist, but under a regularity condition, there is one equilibrium in which market shares signal quality, and then the market tends to be more competitive.