Insider trading with product differentiation

Wassim Daher, Harun Aydilek (), Fida Karam () and Asiye Adydilek ()
Additional contact information
Harun Aydilek: Gulf University for Science and Technology - Department of Mathematics and Natural Sciences, https://www.gust.edu.kw
Asiye Adydilek: Gulf University for Science and Technology - Department of Economics and Finance, https://www.gust.edu.kw

Documents de travail du Centre d'Economie de la Sorbonne from Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne

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: Insider trading; product differentiation; correlated signals; Kyle model (search for similar items in EconPapers)
JEL-codes: D82 G14 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2012-02
New Economics Papers: this item is included in nep-com
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Citations: View citations in EconPapers (3)

Published in Journal of Economics, 111, 2014, pp. 173-201

Downloads: (external link)
http://mse.univ-paris1.fr/pub/mse/CES2012/12014.pdf (application/pdf)
https://halshs.archives-ouvertes.fr/halshs-00676502
https://link.springer.com/article/10.1007/s00712-013-0340-x

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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Persistent link: https://EconPapers.repec.org/RePEc:mse:cesdoc:12014

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