Strategic Partial Inattention in Oligopoly

Pan Lijun ()
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Pan Lijun: School of Business, 12581 Nanjing University , Nanjing, China

The B.E. Journal of Theoretical Economics, 2024, vol. 24, issue 2, 729-740

Abstract: This article examines firms’ choices on partial (in)attention prior to quantity competition. Being partially (in)attentive, a firm accounts for a part of its market impact. We find that regardless of the number of firms, there is always a unique subgame perfect Nash equilibrium where all firms choose to be partially attentive. The optimal attention level decreases in the number of firms, increases in product differentiation, and converges to zero, i.e. firms tend to be fully inattentive, as either the number of firms goes to infinity or product differentiation goes to zero.

Keywords: endogenous market structure; partial (in)attention; optimal attention level (search for similar items in EconPapers)
JEL-codes: D43 L13 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1515/bejte-2023-0028

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