Information Sharing Networks in Oligopoly

Sergio Currarini () and Francesco Feri

No 2008_16, Working Papers from Department of Economics, University of Venice "Ca' Foscari"

Abstract: We study the incentives of oligopolistic firms to share private information on demand parameters. Differently from previous studies, we consider bilateral sharing agreements, by which firms commit at the ex-ante stage to truthfully share information. We show that if signals are i.i.d., then pairwise stable networks of sharing agreements are either empty or made of fully connected components of increasing size. When linking is costly, non complete components may emerge, and components with larger size are less densly connected than components with smaller size. When signals have different variances, incomplete and irregular network can be stable, with firms observing high variance signals acting as "critical nodes". Finally, when signals are correlated, the empty network may not be pairwise stable when the number of firms and/or correlation are large enough.

Keywords: Information sharing; oligopoly; networks; Bayesian equilibrium (search for similar items in EconPapers)
JEL-codes: D43 D82 D85 L13 (search for similar items in EconPapers)
Pages: 34
Date: 2008
New Economics Papers: this item is included in nep-bec, nep-com, nep-cta, nep-gth, nep-ind, nep-mic, nep-net and nep-soc
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