Cournot competition and the social value of information

David Myatt and Chris Wallace

Journal of Economic Theory, 2015, vol. 158, issue PB, 466-506

Abstract: In a differentiated-product Cournot model, each supplier receives informative signals about demand. The cross-industry correlations of the signals differ: more public signals have higher correlation coefficients. In equilibrium, information is used inefficiently. From the industry's perspective, information is over-used, and too much emphasis is placed on relatively public signals; from the consumer's perspective, information is under-used, and too much emphasis is placed on relatively private signals. Welfare is enhanced by increasing the use of information (as desired by consumers) but re-balancing that use away from public signals (as desired by the industry). If information is costly and endogenously acquired, then suppliers acquire too much new information, but they use it too little.

Keywords: Cournot oligopoly; Uncertainty; Bayesian equilibrium; Information acquisition; Public and private information (search for similar items in EconPapers)
JEL-codes: C72 D43 D83 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (33)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:158:y:2015:i:pb:p:466-506

DOI: 10.1016/j.jet.2014.07.011

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