Communication in Cournot Oligopoly

Maria Goltsman and Gregory Pavlov (gpavlov@uwo.ca)

No 20121, University of Western Ontario, Departmental Research Report Series from University of Western Ontario, Department of Economics

Abstract: We study communication in a static Cournot duopoly model under the assumption that the firms have unverifiable private information about their costs. We show that cheap talk between the firms cannot transmit any information. However, if the firms can communicate through a third party, communication can be informative even when it is not substantiated by any commitment or costly actions. We exhibit a simple mechanism that ensures informative communication and interim Pareto dominates the uninformative equilibrium for the firms.

Keywords: Cournot oligopoly; communication; information; cheap talk; mediation (search for similar items in EconPapers)
JEL-codes: C72 D21 D43 D82 D83 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-bec, nep-com, nep-cta, nep-gth, nep-ind and nep-mic
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Citations: View citations in EconPapers (1)

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Journal Article: Communication in Cournot oligopoly (2014)
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