Asymmetric Information And Product Differentiation

Marcel Boyer, Philippe Mahenc and Michel Moreaux

CIRANO Working Papers from CIRANO

Abstract: We show that information asymmetry may not cause any distortion in product differentiation. This contrasts with the main result of the literature on signaling which stresses that information asymmetry has a non negligible impact on strategic behavior. A thorough analysis of the counter-incentives for information concealment shows that much is going on beneath the surface to yield the same equilibrium behaviors under complete and incomplete information. The absence of visible changes in equilibrium locations relies on invisible changes in strategies. There is a crucial modification in the follower's best response to the incumbent's location due to incomplete information. Nous montrons que l'asymétrie d'information peut ne causer aucune distorsion dans la différentiation des produits. Ce résultat va à l'encontre de ceux prévalant dans la littérature sur les signaux, littérature qui soutient que l'asymétrie d'information modifie de manière non négligeable les comportements stratégiques. Une analyse approfondie des contre-incitations pour la dissimulation d'information révèle des modifications sous-jacentes importantes menant aux mêmes observations d'équilibre en information complète et incomplète. L'absence de modifications apparentes dans les localisations d'équilibre repose sur des changements invisibles dans les stratégies, le suiveur modifiant de façon cruciale sa meilleure réponse à la localisation de la firme établie.

Keywords: Asymmetric information; Location; Product Differentiation; Information asymétrique; Localisation; Différentiation de produit (search for similar items in EconPapers)
JEL-codes: D43 D82 L13 (search for similar items in EconPapers)
Date: 2002-02-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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