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

Jos Jansen

No 52, Working Paper Series in Economics from University of Cologne, Department of Economics

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.

Keywords: Cournot oligopoly; information disclosure; exit; cost asymmetry; precommitment (search for similar items in EconPapers)
JEL-codes: D82 L13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-com and nep-cta
Date: 2012-02-10
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