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University of Florida
Levin College of Law

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Monday, December 7, 2009

Information Advantage in Cournot Oligopoly with Separable Information, or Nondifferentiable

Posted by D. Daniel Sokol

Ori Haimanko (Hitotsubashi University - Econ) analyzes Information Advantage in Cournot Oligopoly with Separable Information, or Nondifferentiable.

ABSTRACT: Einy et al (2002) showed that information advantage of a firm is rewarded in any equilibrium of an incomplete information Cournot oligopoly, provided the inverse demand function is differentiable and monotonically decreasing, and costs are affine. We extend this result in two directions. We show first that a firm receives not less than its rival even if that firm's information advantage is only regarding payoff-relevant data, and not necessarily payoff-irrelevant "sunspots". We then show that there is at least one equilibrium which rewards firm's information advantage even with non-differentiable, but concave, inverse demand function. Under certain conditions, these results hold even with always non-negative inverse demand functions.

http://lawprofessors.typepad.com/antitrustprof_blog/2009/12/information-advantage-in-cournot-oligopoly-with-separable-information-or-nondifferentiable.html

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