Sale of monopoly information and behavior of rivaling clients: A theoretical perspective

Chun‐Hao Chang, Arun J. Prakash and Shu Yeh

Review of Financial Economics, 2004, vol. 13, issue 3, 283-304

Abstract: This paper studies a three‐stage Bayesian–Cournot game where rivaling firms sign contracts with an information monopoly to purchase proprietary information. The rivaling firms use the external information to create competitive advantage over one another. Knowing the rivalry among its clients, the information monopoly can exploit them by playing one client against another. The information‐selling strategy depends on the clients' in‐house information technology, the uncertainty of the economic environment, and the number of potential clients. The existence of an information market makes rivaling producers worse off and consumers better off. It is possible that the service of the information monopoly is a private good but a social bad.

Date: 2004
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https://doi.org/10.1016/j.rfe.2003.11.001

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Persistent link: https://EconPapers.repec.org/RePEc:wly:revfec:v:13:y:2004:i:3:p:283-304

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