Information exchanges in cournot duopolies

Abstract

Sumary: 1. Introduction; 2. The model; 3. Case 1: the case of unknown demand intercept; 4. Case 2: the case of unknown slope; 5. Conclusions.Keywords: information exchange; cournot equilibrium; accuracy effect; slope uncertainty; intercept demand uncertainty. JEL codes: D43; D82; L13.In this paper we analyze the profitability of information sharing among Cournot oligopolists receiving private information about random demand. We model the random demand as a linear demand having, 1) an unknown intercept, and 2) an unknown slope. In each of these two scenarios, firms observe private signals about the unknown parameter. We show that in the scenario-1, if the private signal observed by firms is accurate enough, information exchange is profitable and in the scenario-2, if there is a sufficiently large variation in the demand slope and private signals are accurate enough, firms earn strictly higher profits by sharing their information rather than keeping it private.Neste artigo analisamos a rentabilidade dos intercambios de informação entre oligopolistas de Cournot quando recebem informacão privada sobre uma demanda queé aleatoria. Nós modelizamos a demanda aleatoria como uma demanda lineal considerando, 1) Interseção da ordenada na origem desconhecida, e 2) Inclinação * This paper was received in feb. 2001 and approved in apr. 2002. The authors want to thank our Regional Government (Xunta de Galicia) for the scholarship which has been received by the Ph.D. student D. Jesús López-Rodríguez during his stay from 29-06-2000 to 30-09-2000 at the University of Exeter (United Kingdom). We would like to thank Joao Victor Issler as editor and two anonymous referees for their helpful comments on an earlier draft of this paper. We would also like to thank Jose Antonio Seijas Macías for his valuable help and comments given by seminar participants in ASEPELT XIV Oviedo, 2000 (Spain). Responsibility for any errors remains with the authors. ** Jean Monnet Chair in European Industrial Economics. E-mail: fai@udc.es *** Economic Analysis Department, School of Economics and Business Administration, University of A Coruña. E-mail: jelopez@udc.es **** Economic Analysis Department, School of Economics and Business Administration, University of A Coruña. E-mail:jolopez@udc.es desconhecida. Em cada um destes cenarios, as empresas observam sinais privados sobre o parámetro desconhecido. Nós demostramos que no primeiro cenario, se o sinal privado observado pelas empresasé suficientemente preciso, o intercambio de informaçãoé rentavel e noúltimo cenario, se existe uma variação suficientemente ampla na inclinação das demandas e os sinais privados observados pelas empresas são suficientemente precisos, as empresas obtem maiores lucros quando elas compartem sua informação que quando a mantem privada.