 Spying in Bertrand markets under incomplete information: Who benefits and is it stable?Cuihong Fan, Byoung Heon Jun and Elmar Wolfstetter Journal of Mathematical Economics, 2022, vol. 102, issue C Abstract: We analyze spying out a rival’s price in a general duopoly model with differentiated products where payoff functions are strictly supermodular and firms are subject to incomplete information about costs. Spying has two effects: it induces a sequential game and eliminates the spying firm’s uncertainty. In sharp contrast to the case of complete information, spying does not benefit both firms: it adversely affects the spied-at firm if its cost is low and may expose the spying firm to a negative value of information. We decompose the impact of spying into its sequential moves effect and its information effect and find conditions for profitable espionage. We also show that the spied-at firm cannot benefit from bypassing the spy if its cost is low by delaying its pricing decision (or firing the spy) because this would trigger a devastating cascade of belief changes. Keywords: Bertrand games; Stackelberg games; Corporate espionage; Incomplete information; Value of information in games (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:mateco:v:102:y:2022:i:c:s0304406822000647 DOI: 10.1016/j.jmateco.2022.102722 Access Statistics for this article Journal of Mathematical Economics is currently edited by Atsushi (A.) Kajii More articles in Journal of Mathematical Economics from Elsevier |
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