Information Sharing through Sales Report

Jim Jin ()

Journal of Industrial Economics, 1994, vol. 42, issue 3, 323-33

Abstract: This paper studies information sharing through sales reports in Cournot and Bertrand duopolies with common demand uncertainty. Without sales reports, firms choose quantities or prices strategically to manipulate the rivals' perception about the market. Sales reports eliminate firms' incentives to do so and keep them only maximizing the current profits. If firms make independent sales report decisions, no sales report is the unique subgame perfect equilibrium. However in a Cournot (Bertrand) industry firms are better off with sales reports when goods are substitutes (complements). Further, sales reports decrease (increase) consumer surplus and social welfare in a Cournot (Bertrand) industry. The results sharply contrast those from the previous information sharing models where firms exchange signals about the future demand. Copyright 1994 by Blackwell Publishing Ltd.

Date: 1994
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