Information Advantage in Cournot Oligopoly

Einy, Ezra; Moreno, Diego; Shitovitz, Benyamin

doi:10.1006/jeth.2001.2871

Cited by 33 publications

(30 citation statements)

References 25 publications

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“…In other works (see, e.g., Sakai (1985)), incomplete information is assumed only on …rms' linear costs, which again allows to avoid the 2 More preceisely, each …rm's payo¤ function satis…es the condition of reverse single crossing property of Amir (1996) with respect to its own output and the aggregate output of the other …rms. 3 See, theorems 1.1 and 1.2, and corollary 2.2, respectively, in Amir (1996).…”

Section: Introductionmentioning

confidence: 99%

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On the existence of Bayesian Cournot equilibrium

Einy

Haimanko

Moreno

et al. 2010

Games and Economic Behavior

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We show that when …rms have incomplete information about the market demand and their costs, a (Bayesian) Cournot equilibrium in pure strategies may not exist, or be unique. In fact, we are able to construct surprisingly simple and robust examples of duopolies with these features. However, we also …nd some su¢ cient conditions for existence, and for uniqueness, of Cournot equilibrium in a certain class of industries.More general results arise when negative prices are possible.

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Section: Introductionmentioning

confidence: 99%

“…Since both types of submodularity imply strategic substitutes, existence of equilibrium in a duopoly can be established using Tarski's …xed point theorem. 3 Existence of equilibrium in oligopolies with more than two …rms can be established using a more sophisticated …xed-point theorem due to Kukushkin (1994).…”

Section: Introductionmentioning

confidence: 99%

On the existence of Bayesian Cournot equilibrium

Einy

Haimanko

Moreno

et al. 2010

Games and Economic Behavior

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Section: Introductionmentioning

confidence: 99%

On the Existence of Bayesian Cournot Equilibrium

et al. 2007

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Acknowledgements: The authors are indebted to an anonymous referee for insightful suggestions that greatly improved the presentation of our results. These suggestions helped us both to better position our work in the general context, and to provide a sharper insight into the source of non-existence of a Bayesian Cournot equilibrium in the examples presented in Section 3.The authors also gratefully acknowledge …nancial support of the Spanish Ministry of Education, grant SEJ2007-67436. 1 Hitotsubashi Universiry Economics Discussion Paper Series No. 2008-11 AbstractWe show that when …rms have incomplete information about the market demand and their costs, a (Bayesian) Cournot equilibrium in pure strategies may not exist, or be unique. In fact, we are able to construct surprisingly simple and robust examples of duopolies with these features. However, we also …nd some su¢ cient conditions for existence, and for uniqueness, of Cournot equilibrium in a certain class of industries.More general results arise when negative prices are possible.

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“…3 The idea that having or using less information may make firms better off is also explored by Gal-Or (1988), who finds in her two-period model that a firm in a duopolistic market in which there is incomplete information about cost may benefit from having less precise prior information than its competitor, because having imprecise prior information provides a mechanism that enables the firm to commit to expand production relative to its rival. While we find that there are many cases in which firms would prefer to share their information with their competitors, as is consistent with the previous literature, we also find that, perhaps surprisingly, under certain conditions, industries have the incentive to coordinate on an equilibrium in which all firms calculate strategies based on heuristics rather than on the full information about the distribution of private information.…”

Section: Introductionmentioning

confidence: 99%

On the use of heuristics to approximate competitors’ private information

Lin

Muehlegger

2013

Journal of Economic Behavior & Organization

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Firms often lack knowledge of the nature of the uncertainty they or their opponents face and use heuristics or approximations to determine their strategy. We define and analyze one type of "heuristic strategy", in which firms choose strategies based on the expectation of their opponents' private information rather than the full information about the distribution of that private information. We find that, in equilibrium, the degree to which the heuristic strategy differs from the Bayesian strategy depends on: (1) the convexity of a firm's marginal profits with respect to their opponents' private information, and (2) whether firm strategies are complementary or substitutable. Under certain conditions, firms' equilibrium profits are greater when all firms use heuristics than when all firms use the full information. Our results provide insight into incentives firms may have to either facilitate or impede access to industry information.JEL Classification: D21, D80, L10

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Information Advantage in Cournot Oligopoly

Cited by 33 publications

References 25 publications

On the existence of Bayesian Cournot equilibrium

On the existence of Bayesian Cournot equilibrium

On the Existence of Bayesian Cournot Equilibrium

On the use of heuristics to approximate competitors’ private information

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