Financial prices and information acquisition in large Cournot markets

Giacomo Rondina and Myungkyu Shim

Journal of Economic Theory, 2015, vol. 158, issue PB, 769-786

Abstract: In the context of a large Cournot market with dispersedly informed firms, we show that while output decisions are strategic substitutes, private information acquisition decisions can be strategic complements. The reversal of incentives operates through the informational role played by the price of a financial asset whose payoff depends on firms' output decisions. Our results rely on a novel mechanism whereby, holding fixed the private information of financial traders, when firms become more privately informed the financial asset price becomes less informative.

Keywords: Dispersed information; Information acquisition; Cournot market; Grossman–Stiglitz (search for similar items in EconPapers)
JEL-codes: D4 D8 E1 G1 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:158:y:2015:i:pb:p:769-786

DOI: 10.1016/j.jet.2014.12.004

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