Majoritarian preference, utilitarian welfare and public information in Cournot oligopoly

Jaideep Roy, Randy Silvers and Ching-jen Sun

Games and Economic Behavior, 2019, vol. 116, issue C, 269-288

Abstract: Can individual preferences for public information among heterogeneous consumers be aggregated into a meaningful social preference that does not suffer from Condorcet cycles? In a Cournot model where homogeneous producers observe a public signal about an uncertain cost of production prior to taking quantity decisions, we show that the majoritarian preference of consumers for the precision of public information is fairly well behaved so that a Condorcet winner always exists. Under a monotonicity condition on the demand function, we characterize the Condorcet-winning precision in terms of the demand function and the number of firms under which the Condorcet-winning precision (i) hurts consumers' surplus and profits or (ii) remains conflict-free. These results have interesting implications on ‘collective’ Bayesian persuasion by agencies representing consumers, showing that when full transparency maximizes expected consumers' surplus, collective Bayesian persuasion can lead to full opacity, and vice versa.

Keywords: Cournot oligopoly; Uncertain costs; Precision of public information; Majoritarian preference; Condorcet winner; Conflict; Collective Bayesian persuasion (search for similar items in EconPapers)
JEL-codes: D02 D11 D43 D60 D70 D80 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:116:y:2019:i:c:p:269-288

DOI: 10.1016/j.geb.2019.05.005

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