Cooperation in a differentiated duopoly when information is dispersed: A beauty contest game with endogenous concern for coordination

Camille Cornand and Rodolphe Dos Santos Ferreira

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Abstract: The paper provides a micro-founded differentiated duopoly illustration of a beauty contest, in which the weight put on the strategic vs. the fundamental motive of the payoffs is not exogenous but may be manipulated by the players. We emphasize the role of the competition component of the strategic motive as a source of conflict with the fundamental motive. This conflict, already present in an oligopolistic setting under perfect information, is only exacerbated when information is imperfect and dispersed. We show how firm owners ease such conflict by opting for some cooperation, thus moderating the competitive toughness displayed by their managers. By doing so, they also influence the managers' strategic concern for coordination and consequently the weight put on public relative to private information.

Keywords: beauty contest; dispersed information; public information; competition; cooperation; coordination; delegation game; differentiated duopoly; dispersed information JEL codes: D43; D82; L13; L21 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-gth, nep-hpe, nep-mic and nep-pke
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01116156v5
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Cooperation in a differentiated duopoly when information is dispersed: A beauty contest game with endogenous concern for coordination (2020)
Working Paper: Cooperation in a differentiated duopoly when information is dispersed: A beauty contest game with endogenous concern for coordination (2020)
Working Paper: Cooperation in a differentiated duopoly when information is dispersed: A beauty contest game with endogenous concern for coordination (2017)
Working Paper: Cooperation in a differentiated duopoly when information is dispersed: A beauty contest game with endogenous concern for coordination (2015)
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