Knowing Versus Telling Private Information About a Rival

Mark Bagnoli and Susan G. Watts

Purdue University Economics Working Papers from Purdue University, Department of Economics

Abstract: As part of a broad competitive intelligence strategy, firms expect to acquire information about their rivals customers and production processes. In this study, we examine the firms incentives to disclose this information. We find that firms adopt a policy of disclosing their information regardless of whether it concerns a rival s customers or production costs or whether the firms are Cournot or Bertrand competitors. Firms that have private information about their rivals tell. Their willingness to disclose private information about their rivals contrasts with the results in the literature when the firm has information about itself. This literature shows that the chosen disclosure policy depends on whether information is about the firm s own payoffs or industry demand and whether the firms strategies are substitutes or complements.

Keywords: disclosure policy; voluntary disclosure; asymmetric information; Cournot competition; Bertrand competition (search for similar items in EconPapers)
JEL-codes: G1 G14 M41 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2010-08
New Economics Papers: this item is included in nep-bec, nep-com and nep-cta
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Persistent link: https://EconPapers.repec.org/RePEc:pur:prukra:1250

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