Corporate Espionage

Pascal Billand, Christophe Bravard, Subhadip Chakrabarti and Sudipta Sarangi

No 854, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: We consider a multimarket framework where a set of firms compete on two interrelated oligopolistic markets. Prior to competing in these markets, firms can spy on others in order to increase the quality of their product. We characterize the equilibrium espionage networks and networks that maximize social welfare under the most interesting scenario of diseconomies of scope. We find that in some situations firms may refrain from spying even if it is costless. Moreover, even though spying leads to increased product quality, there exist situations where it is detrimental to both consumer welfare and social welfare.

Keywords: Oligopoly; multimarket; networks (search for similar items in EconPapers)
JEL-codes: C70 L13 L20 (search for similar items in EconPapers)
Pages: 29 p.
Date: 2009
New Economics Papers: this item is included in nep-com
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Related works:
Working Paper: Corporate espionage (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:diw:diwwpp:dp854

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