Cournot duopoly and insider trading with two insiders

Wassim Daher and Leonard Mirman

Cahiers de la Maison des Sciences Economiques from Université Panthéon-Sorbonne (Paris 1)

Abstract: In this paper, we study a version of the static Jain-Mirman (2002) model in which competition in the real sector is introduced. In this paper, we add competition in the stock sector to the Jain-Mirman (2002) paper. We show that the linear equilibrium structure is affected by this competition in the financial sector. Specifically, we show that the stock price set by the market maker reveals more information and that the behaviour of the profits of the manager depends on the parameters of the model. Moreover, we prove that the level of output produced by the manager is less than in Jain-Mirman (2002). Finally, we also study the case in which the market maker receives only one signal and analyze the comparative statics of this model when the market maker receives either one or two signals

Keywords: Insider trading; stock prices; correlated signals; Kyle model (search for similar items in EconPapers)
JEL-codes: D82 G14 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2004-09
New Economics Papers: this item is included in nep-fin and nep-fmk
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ftp://mse.univ-paris1.fr/pub/mse/cahiers2004/B04077.pdf (application/pdf)

Related works:
Journal Article: Cournot duopoly and insider trading with two insiders (2006)
Working Paper: Cournot duopoly and insider trading with two insiders (2004)
Working Paper: Cournot duopoly and insider trading with two insiders (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:mse:wpsorb:b04077

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