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

Working Papers of BETA from Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg

Abstract: The paper provides a micra-founded differentiated duopoly illustration of a beauty contest, in which the weight put on the strategic vs. the fundamental motive of the pay­ offs 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 fun­ damental 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 sorne 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; competition; cooperation; coordination; differentiated duopoly; dispersed information; public information. (search for similar items in EconPapers)
JEL-codes: D43 D82 L13 L21 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-bec, nep-cdm, nep-com, nep-exp, nep-gth, nep-ind and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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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 (2015)
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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Persistent link: https://EconPapers.repec.org/RePEc:ulp:sbbeta:2017-05

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