Insider Trading With Product Differentiation

Wassim Daher, Harun Aydilek (), Fida Karam () and Asiye Aydilek ()
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Harun Aydilek: GUST - Gulf University for Science and Technology
Asiye Aydilek: GUST - Gulf University for Science and Technology

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: In this paper, we analyze the effect of Cournot competition with differentiated products on the real and financial decisions of a publicly-owned firm, with three different structures in the financial market : monopoly, duopoly and Stackelberg. We shows that the degree of product differentiation does not affect the results found in the literature on insider trading, concerning the effect of the financial market structure on firms' outputs, the revelation of information and the insiders' orders. Besides, firms' output, the amount of information revealed in the stock price, the insiders' trading orders and the owners' profits are independent of the degree of product differentiation. The real market structure through the degree of product differentiation is found to determine the level of the compensation scheme earned by the manager, the market makers' response to the total order flow signal as well as the managers' profits.

Keywords: Kyle model.; Kyle model; Insider trading; product differentiation; correlated signals; modèle de Kyle; signaux corrélés; Initié; différentiation des produits (search for similar items in EconPapers)
Date: 2012-02
New Economics Papers: this item is included in nep-com and nep-ind
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Published in 2012

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Related works:
Journal Article: Insider trading with product differentiation (2014)
Working Paper: Insider Trading With Product Differentiation (2012)
Working Paper: Insider trading with product differentiation (2012)
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