Information disclosure in preemption races:Blessing or (winner's) curse?

Catherine Bobtcheff, Raphaël Levy and Thomas Mariotti ()
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Catherine Bobtcheff: TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement
Raphaël Levy: HEC Paris - Ecole des Hautes Etudes Commerciales
Thomas Mariotti: TSE-R - TSE-R Toulouse School of Economics – Recherche - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

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Abstract: Firms receiving independent signals on a common-value risky project compete to be the first to invest. When firms are symmetric and competition is winner-take-all, rents are fully dissipated in equilibrium and the extent to which signals are publicly disclosed is irrelevant for welfare. When disclosure of signals is asymmetric, welfare is highest when firms are most asymmetric, and policies that uniformly promote disclosure may backfire, especially when competition is severe. When firms strategically select their disclosure policies, a moderate subsidy for disclosure induces a low correlation between firms' policies, and thus maximizes welfare.

Date: 2025-05-16
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