Information-sharing in oligopoly
Abstract
In some industries firms share information about demand and costs. Information sharing may facilitate collusion and hurt consumers. The thesis tries to answer two questions: (1) under what conditions do firms have incentives to share information if they do not collude? and (2) how does information sharing affect consumers and the society? The first chapter is a literature survey. The second chapter considers a general oligopoly model where firms share information (demand or cost signals) through a trade association. We can determine firms' incentives to share information and the welfare effect. The third chapter deals with a duopoly model where firms make long run decisions such as cost reduction and market promotion. We find the condition under which firms have incentives to share long run information. In the fourth chapter, two firms share demand information by reporting their past sales instead of exchanging signals about future demand. We evaluate the effect of past sales reporting. In the fifth chapter we study the effect of cost reduction investment revelation. In the sixth chapter, a firm producing high quality products reveals its R&D progress to its low quality competitor. We find its impact on firms and on consumers. In the last chapter we consider information sharing incentives in three special cases.
Degree
Ph.D.
Advisors
Novshek, Purdue University.
Subject Area
Economic theory
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