Information Acquisition with Endogenously Determined Cost in Cournot Markets with Stochastic Demand

Eliane Catilina

MPRA Paper from University Library of Munich, Germany

Abstract: This paper presents a model of information acquisition in Cournot Market with stochastic demand where the acquisition cost is endogenously determined. The novelty is to consider the possibility of cost reducing alliances to be formed in the first-stage of a two-stage acquisition game. This paper encompasses the main assumptions found in the current literature on information acquisition regarding the role of information and how it affects firms’ profits in a two stage the game. However, we argue that by adding natural assumptions regarding the choices and trade-offs between cost reduction and loss of strategic value we provide a better prediction for the outcome of information acquisition games and welfare implications.

Keywords: Information acquisition; Cost Sharing Alliances; Information Asymmetry; Strong Nash Equilibrium. (search for similar items in EconPapers)
JEL-codes: D43 D81 L13 (search for similar items in EconPapers)
Date: 2019-03-25
New Economics Papers: this item is included in nep-com, nep-gth, nep-ind, nep-mic and nep-ore
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:93896

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