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Levin College of Law

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Wednesday, April 18, 2012

Beyond the Need to Boast: Cost Concealment Incentives and Exit in Cournot Oligopoly

Posted by D. Daniel Sokol

Jos Jansen (University of Cologne) has written on Beyond the Need to Boast: Cost Concealment Incentives and Exit in Cournot Oligopoly.

ABSTRACT: This paper studies the incentives for production cost disclosure in an asymmetric Cournot oligopoly. Whereas the efficient firm (consumers) prefers information sharing (concealment) when the firms choose accommodating strategies in the product market, the firm (consumers) may prefer information concealment (sharing) when it can exclude its competitors from the market. Hence, the rankings of expected profit and consumer surplus can be reversed if exit of the inefficient firms is possible. Although the efficient firm has stronger incentives to share information when it shares strategically, there remain cases in which the firm conceals information in equilibrium to induce exit.

http://lawprofessors.typepad.com/antitrustprof_blog/2012/04/beyond-the-need-to-boast-cost-concealment-incentives-and-exit-in-cournot-oligopoly-.html

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