Oligopoly Information Exchange when Non‐negative Price and Output Constraints may Bind

David A. Maleug and Shunichi O. Tsutsui

Australian Economic Papers, 1998, vol. 37, issue 4, 363-371

Abstract: The oligopoly information exchange literature has consistently employed linear demand functions. This paper explores whether earlier results are sensitive to the assumption of linear demand. Non‐linearity arises naturally from the condition that prices and outputs be non‐negative. We show standard results on information sharing can be reversed when there is the chance that non‐negativity constraints bind: in a homogeneous‐goods Cournot duopoly with constant marginal costs, information sharing can be profitable and it can reduce social welfare.

Date: 1998
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