Economics at your fingertips  

Strategic Communication: Prices Versus Quantities

Ricardo Alonso, Wouter Dessein () and Niko Matouschek

Journal of the European Economic Association, 2010, vol. 8, issue 2-3, 365-376

Abstract: We examine how cheap talk communication between managers within the same firm depends on the type of decisions that the firm makes. A firm consists of a headquarters and two operating divisions. Headquarters is unbiased but does not know the demand conditions in the divisions' markets. Each division manager knows the demand conditions in his market but is also biased toward his division. The division managers communicate with headquarters, which then sets either the prices or quantities for each division. The quality of communication depends on whether headquarters sets prices or quantities. This is the case even though, once communication has taken place, expected profits are the same whether headquarters sets prices or quantities. (JEL: D21, D83, L20) (c) 2010 by the European Economic Association.

JEL-codes: D21 D83 L20 (search for similar items in EconPapers)
Date: 2010
References: Add references at CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link) link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Strategic communication: prices versus quantities (2011) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from

Access Statistics for this article

Journal of the European Economic Association is currently edited by Xavier Vives, George-Marios Angeletos, Orazio P. Attanasio, Fabio Canova and Roberto Perotti

More articles in Journal of the European Economic Association from MIT Press
Bibliographic data for series maintained by Ann Olson ().

Page updated 2021-09-09
Handle: RePEc:tpr:jeurec:v:8:y:2010:i:2-3:p:365-376