Information Acquisition in Vertical Relations

Pio Baake, Andreas Harasser and Friederike Heiny

No 1543, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: We analyze a simple supply chain with one supplier, one retailer and uncertainty about market demand. Focusing on the incentives of the supplier and the retailer to enhance their private information about the actual market conditions, we show that choices on information acquisition are strategic complements. While the retailer's incentives are mainly driven by the information rent that he can earn, the supplier will choose to acquire information only if the retailer is rather well informed, even though the information is free of charge.

Keywords: Asymmetric information; information acquisition; vertical relations (search for similar items in EconPapers)
JEL-codes: D82 D83 D86 (search for similar items in EconPapers)
Pages: 18 p.
Date: 2016
New Economics Papers: this item is included in nep-com, nep-cta, nep-mic, nep-mkt and nep-ore
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Journal Article: Information Acquisition in Vertical Relations (2017)
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