Trade Associations as Information Exchange Mechanisms

Alison J. Kirby

RAND Journal of Economics, 1988, vol. 19, issue 1, 138-146

Abstract: This article examines the incentives of firms competing in an oligopolistic industry to share information about an unknown demand parameter when such sharing takes place on a quid pro quo basis. The model predicts that if total cost functions are sufficiently convex, information sharing (such as through a trade association) is Pareto-preferred to a setting of private information and forms a Nash equilibrium. Expected consumer surplus also always increases when information is shared.

Date: 1988
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