Information Sharing Networks in Oligopoly

Yong-Ju Lee
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Yong-Ju Lee: Yeungnam University

Korean Economic Review, 2014, vol. 30, 41-66

Abstract: We analyze the information sharing incentives of firms in a decentralized environment when firms face a stochastic demand. In order to do that, we develop a two stage model of strategic network formation, which consists of cooperative network formation in the first stage and noncooperative Bayesian Cournot competition in the second stage. Then we derive pure strategy mixed cooperative and noncooperative equilibria that are stable and subgameperfect, and characterize the equilibrium graph structure. Our main finding is that the incentives of firms for information sharing may vary depending on whether the decision is made in a centralized or a decentralized environment.

Keywords: Information Sharing; Networks; Pairwise Stability; Strong Stability; Graph (search for similar items in EconPapers)
JEL-codes: C70 D85 L13 (search for similar items in EconPapers)
Date: 2014
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