exploration and extraction in a duopoly exhaustible resource market exploration for an exhaustible natural resource is valuable because it produces information about the resource stock i model a duopoly exhaustible resource industry with imperfect information about stock size as a two period game where each period is made up of an exploration stage and an extraction stage i derive the value of gaining information about stock size prior to committing to an extraction plan both for the exploring firm and for the rival i show that an exploring firm would prefer on average to keep exploration information private but that industry profit is higher when information is made public le processus d e xploration et d extraction dans un marche de ressource naturelle non renouvelable oui il y a un duopole le processus d exploration est utile parce qu il permet de produire des renseignements quant a la taille du stock d une ressource naturelle non renouvelable l auteur examine un modele de duopole dans un jeu a deux p6riodes pour une industrie de ressource naturelle non renouvelable l information est imparfaite quant a la taille du stock de resource et chacune des deux p6riodes a un stage d exploration et un stage d extraction l auteur d6rive la valeur de l information additionnelle qujant a la taille du stock de ressource avant de s etngager dans un plan d extraction a la fois pour l entreprise exploratrice et pour l entreprise rivale on montre que l enterprise exploratrice va pr6f6rer en moyenne garder l information priv6e mais que les profits dans l industrie sont plus 6lev6s quand l information est rendue publique

information transmission cournot and bertrand equilibria we examine how incentives for two duopolists to honestly share information change depending upon the nature of competition cournot or bertrand and the nature of the information structure while in earlier papers uncertainty is about an unknown common demand intercept in the present paper uncertainty is about unknown private costs the different information structure reverses the incentives to share information while with unknown common demand sharing is a dominant strategy with bertrand competition and concealing is a dominant strategy with cournot competition with unknown private costs sharing is a dominant strategy with cournot competition and concealing is a dominant strategy with bertrand competition

cournot oligopoly with information sharing this paper studies the incentives for information sharing among firms in a cournot oligopoly facing a linear uncertain demand and an affine conditional expectation information structure no information sharing is found to be the unique equilibrium in two cases in which the signals with equal precision are assumed indivisible and infinitely divisible however the nonpooling equilibrium converges to the situation where the pooling strategies are adopted as the amount of information increases hence the efficiency is achieved in the competitive equilibrium as the number of the firm become large

nonrenewable resource scarcity nonrenewable resource theory often is summarized by hotelling s rule this paper reviews theoretical extensions and empirical investigations of resource extraction models observed data are often inconsistent with the hotelling rule suggesting that other characteristics of nonrenewable resource supply including exploration heterogeneous ore quality technological progress and capital investment are important determinants of the dynamic behavior of resource prices given the persistent recurrence of concern about nonrenewable resource scarcity measures of nonrenewable resource scarcity and the empirical evidence for the time trends of those measures are reviewed finally the implications of nonrenewable resource scarcity for economic growth are examined

information disadvantage in linear cournot duopolies with differentiated products abstract we focus on a class of linear cournot duopolies with differentiated products and prove that whether there is an information advantage or disadvantage depends on firms information setup specifically we show that when the cross effects are common value the uninformed firm that commits to quantity will not have lower ex ante profits than a firm that has complete information about its cross effects this result contrasts to the information advantage that holds in the same duopolies with independent cross effects

strategic information disclosure the case of multi attribute products with heterogeneous consumers we examine the incentives for firms to voluntarily disclose otherwise private information about quality attributes of differentiated products in particular we focus on the case of differentiated products with multiple attributes and consumers that are heterogeneous in their preferences over these attributes we show that there exist certain configurations of consumer preferences under which a firm producing a high quality product even with zero costs of disclosure may choose not to reveal the quality of its product this failure of firms to voluntarily disclose the quality of their products will arise when providing consumers with more information results in more elastic demands for these products which in turn triggers more intensive price competition and leads to lower prices and profits for all firms as a result the equilibrium in which disclosure is voluntary may diverge from that in which disclosure is mandatory

information acquisition as business strategy information acquisition activities such as accounting disclosure financial analysis and marketing research are major concerns in moder business administration business enterprises often invest enormous amounts of time and money in obtaining information for the various tasks of decision making a growing literature is devoted to addressing the role of information in the production decision and the market structure however little effort has been devoted to understanding information acquisition as an essential part of business strategy the purpose of this paper is to analyze information gathering as a competition strategy of manufacturing firms and to examine its implications for the welfare of society li mckelvey and page 13 and vives 20 use a two stage game model to study the information acquisition of oligopolistic firms however these authors ignore the strategic aspect of information acquisition in both 13 and 20 firms are symmetric and produce a homogenous good therefore the equilibrium is also symmetric all firms gather the same amount of industrywide information we generalize 13 in several ways we allow firms to produce differentiated products and to use the information they acquire to contest the product market moreover the information in our model can be partly firm specific and partly industry wide we adopt a convex information cost function more general than that of 13 therefore 13 can be interpreted as a special case of the model presented here novshek and sonnenschein 14 gal or 6 vives 19 and li 12 study the possibility of trading or sharing the exogenous industry wide information about demand okada 15 fried 4 li 12 shapiro 18 and seidmann 17 examine the incentive for disclosing exogenous firm specific information about costs in an oligopoly 2 we extend the analysis in this literature

monopolistic competition in the spirit of chamberlin a general model this paper develops a model of large group chamberlinian monopolistic competition in which 1 there are many firms producing differentiated commodities 2 each firm is negligible in that it can ignore its impact on and hence reactions from other firms 3 free entry leads to zero profit of operating firms but 4 each firm faces a downward sloping demand curve the existence of a monopolistically competitive equilibrium is established in a companion paper more particular questions such as whether the market provides too many or too few products are addressed for a special case of the model

information and volatility in an economy of interacting agents with both idiosyncratic and aggregate shocks we examine how the structure of private information in uences aggregate volatility the maximal aggregate volatility is attained in a noise free information structure in which the agents confound idiosyncratic and aggregate shocks and display excess response to the aggregate shocks as in lucas 14 for any given variance of aggregate shocks the upper bound on aggregate volatility is linearly increasing in the variance of the idiosyncratic shocks our results hold in a setting of symmetric agents with linear best responses and normal uncertainty we establish our results by providing a characterization of the set of all joint distributions over actions and states that can arise in equilibrium under any information structure this tractable characterization extending results in bergemann and morris 8 can be used to address a wide variety of questions linking information with the statistical moments of the economy

aggregation of information in large cournot markets consider a homogeneous product market where firms have private information about an uncertain demand parameter and compete in quantities we examine the convergence properties of bayesian cournot equilibria as the economy is replicated and conclude that large cournot or almost competitive markets do not aggregate information efficiently except possibly when the production technology exhibits constant returns to scale even in a competitive market there is a welfare loss with respect to the first best outcome due to incomplete information in general nevertheless a competitive market is efficient taking as given the decentralized private information structure of the economy endogenous and costly information acquisition is examined and seen to imply that the market outcome always falls short of the first best level with decreasing returns to scale the results are also shown to be robust to the addition of extra rounds of competition which allows firms to use the information revealed by past prices explicit closed form solutions yielding comparative static results are obtained for models characterized by quadratic payoffs and affine information structures

strategic transparency and informed trading will capital market integration force convergence of corporate governance dominant investors can influence the publicly available information about firms by affecting the cost of information collection under strategic competition transparency results in higher variability of profits and output thus lenders prefer less transparency since this protects firms when in a weak competitive position while equity holders prefer more market interaction creates strategic complementarity in gathering information on competing firms thus entry by transparent competitors will improve price informativeness moreover as the return to information gathering increases with liquidity increasing global trading may undermine the ability of bank control to keep firms opaque

information revelation in auctions with common and private values we explore the incentives to reveal verifiable private information when there are both common and private components to agents valuations and when private information is held in both dimensions when agents observe only one signal they have no incentive to reveal the signal because such a revelation would negate their information advantage however when agents observe multiple signals they may be incentivized to reveal certain signals that could lower their opponents bids and thereby result in a higher profit from other signals this paper shows that there exists an equilibrium with revelation of common value signals in standard auctions which is an efficient equilibrium that maximizes the social welfare and could provide the seller with a higher profit than a situation with no information revelation

evasive lying in strategic communication abstract information asymmetries in economic transactions are omnipresent and a regular source of fraudulent behavior in a theoretical and an experimental analysis of a sender receiver game we investigate whether sanctions for lying induce more truth telling the novel aspect in our model is that senders may not only choose between truth telling and explicit lying but may also engage in evasive lying by credibly pretending not to know while we find that sanctions promote truth telling when senders cannot engage in evasive lying this is no longer true when evasive lying is possible then explicit lying is largely substituted by evasive lying which completely eliminates the otherwise positive effect of sanctions on the rate of truth telling as outlined in our model the necessary prerequisite for such an erosion effect is that evasive lying is perceived as sufficiently less psychologically costly than direct lying evidence from our experimental data and a survey conducted with additional participants indicate that the shift towards evasion can indeed be attributed to lower psychological costs overall our results clearly demonstrate the limitations of sanctioning lying to counteract the exploitation of informational asymmetries and may explain the empirical evidence from the finance industry that sanctions for financial misconduct eventually appear to be not very effective

information use and acquisition in price setting oligopolies asymmetric price setting multi product suppliers have access to multiple sources of information about demand conditions where the publicity of each source corresponds to the cross industry correlation of signals received from it a signal s influence on suppliers prices is increasing in its publicity as well as in its precision the emphasis on relatively public information is stronger for smaller suppliers who control narrower product portfolios when information is endogenously acquired suppliers listen to only a subset of information sources this subset is smaller when products are less differentiated and when the industry is less concentrated smaller suppliers focus attention on fewer information sources the inefficiencies arising from information acquisition and use are identified the associated externalities depend upon the extent of product differentiation the concentration of the industry and the degree of decreasing returns to scale

information sharing information free riding and capital structure in oligopolies we study the effect of capital structure decisions on the incentives for firms in a duopoly to share information through a trade association focusing on the case of cournot competition with demand uncertainty we find that the standard result for all equity firms that information will not be shared may be reversed when one firm has better access to information than the other leverage may be a way for the latter firm to free ride on the former firm s information with ex ante symmetric firms a trade association will be formed even if information sharing does not occur

a political economy approach to the neoclassical gradualist model of transition a political economy approach to the neoclassical gradualist model of transition requires the exposition of what i define the primary elements of the model which are economic analysis definition of a good society speed political structure ideological structure and whether the initial conditions were incorporated in the model after the identification of the primary elements of the neoclassical gradualist model the next step is to identify secondary elements the desired changes with respect to price liberalization stabilization privatization institutional structure monetary policy and the financial system fiscal policy international trade and foreign aid and social policy the analytical framework developed makes possible to understand the neoclassical gradualist model from a new and more enlightening perspective we are better able to comprehend the complexities involved and the disagreements about the reform process the adoption of a gradual process of transition did not only involve specifying the required policies of a successful transition but also entailed a process a sequence by which the reforms should be introduced as such a process of transition consistent with the policies recommended by the neoclassical gradualists economists is developed the conclusion reveals the inconsistencies in the model copyright blackwell publishers ltd 2005

insisting on a non negative price oligopoly uncertainty welfare and multiple equilibria i study cournot competition under incomplete but symmetric information about the intercept of the linear demand function while assuming that market price must be non negative for all demand realizations although the non negativity assumption is very natural it has only rarely been made in the earlier literature yet it has important economic consequences 1 expected demand effectively becomes convex which means that multiple symmetric pure strategy equilibria can exist and 2 expected total surplus can be larger when the firms do not know demand than when they do the arguments of the paper are relevant also for price competition and for uncertainty about e g cost or the number of firms and these issues are discussed

bargaining and sharing innovative knowledge we consider the problem of bargaining over the disclosure of interimresearch knowledge between two participants in an r d race for an ultimate patentable invention licence fee schedules that are functions of the amount of knowledge disclosed by the leading to the laggingagent are examined for their abilities to attain efficient outcomes andvarying shares of the surplus arising from disclosure in hersequential offers bargaining games the uninformed buyer is able to elicitfull disclosures without sharing the incremental surplus with any type ofthe licensor and thus do as well as a perfectly informed and discriminatingknowledge licensee

communication in cournot oligopoly abstract this paper studies communication in a static cournot duopoly model under the assumption that the firms have unverifiable private information about their costs we investigate the conditions under which the firms cannot transmit any information through cheap talk and show that when these conditions are violated it may be possible to construct informative cheap talk equilibria if the firms can communicate through a third party communication can be informative even when informative cheap talk is impossible we exhibit a simple mediated mechanism that ensures informative communication and interim pareto dominates the uninformative equilibrium for the firms

exchange of cost information in oligopoly when do oligopolists gain by sharing their private information about their costs with one another what are the social welfare effects of such information exchange i study these questions by comparing the oligopolists expected profits under a cost sharing agreement with their expected profits in the bayesian equilibrium that would arise without cost sharing i also analyse the firms decisions to form a trade association to share their cost data under conditions of linear demand and cournot behaviour industrywide information exchange is the unique point in the core of the trade association membership game the exchange of cost data increases expected profits and welfare but reduces expected consumer surplus cost sharing increases efficiency by raising the market shares of lower cost firms and reducing the variability of aggregate output consumer surplus is diminished however because the variance of output is reduced and consumer surplus is a convex function of output

licensing a non drastic innovation under double informational asymmetry this paper deals with the problem faced by a patentee owning a new production process whose value is unknown ex ante the patentee must license the new technology to users in order to profit from it and each potential licensee has production costs using the technology that are unknown to everyone until after contracting at which point each licensee gets private information about her own costs moreover the patentee cannot observe outputs of potential licensees and therefore must use lump sum rather than per unit royalty schedules to license the technology in this setting the optimal licensing scheme from both the industry and the innovator viewpoints is defined as well as the socially optimal dynamic industrial structure to market the technology welfare aspects of regulation on patents length are also discussed in this context

information sharing through sales report this paper studies information sharing through sales reports in cournot and bertrand duopolies with common demand uncertainty without sales reports firms choose quantities or prices strategically to manipulate the rivals perception about the market sales reports eliminate firms incentives to do so and keep them only maximizing the current profits if firms make independent sales report decisions no sales report is the unique subgame perfect equilibrium however in a cournot bertrand industry firms are better off with sales reports when goods are substitutes complements further sales reports decrease increase consumer surplus and social welfare in a cournot bertrand industry the results sharply contrast those from the previous information sharing models where firms exchange signals about the future demand copyright 1994 by blackwell publishing ltd

the remonetization of the commonwealth of independent states in 1940 britain saved herself from tyranny by her endeavors in the long run she saved the world from tyranny by her example in that fateful year a splendid few rose up into the skies over britain to do battle against the forces of despotism and evil an analogously small number took up the pen rather than the sword preeminent among these was friedrich august von hayek the fourth generation of austrian economists worked mostly abroad it was england s good fortune to be the safe haven of hayek from 1932 to 1950 where he was tooke professor of economic science and statistics at the london school of economics with the inevitable delays imposed by the uncertainties of war the road to serfdom was eventually published in england in the spring of 1944 deservedly it became an instant success and hayek found out immediately what a tiny minority he was in one is reminded of the english bowman before the battle of agincourt who laments to king henry that the odds appear to be five to one against the english to which henry replies if fewer men the greater share of honor it is a wonderful thing that hayek has lived to see the good that he espoused triumph over the evil that he despised and the forces of tyranny put to flight on a global scale no one could be more deserving of the share of honors that have been bestowed upon him

industry equilibrium with outside financing and moral hazard implications for market integration abstract in this paper we study industry equilibrium under the assumptions that 1 firms need outside financing and 2 they have a moral hazard problem in taking potentially excessive risks we characterize an industry equilibrium with credit rationing where firms choose not to take risks and compare this to the industry equilibrium in the absence of credit rationing in both cases we show that competition increases and prices decline as markets integrate however in markets with credit rationing there is typically more exit a smaller decline in prices and most strikingly the market value of the industry increases rather than decreases

the value to a firm of its rival learning abstract in price competition a firm f reduces its rival s r learning about r s cost in quantity price competition f wants r not to learn about f s cost i show that in quantity competition f wants r not to learn about r s cost

trade association disclosure rules incentives to share information and welfare in this article i propose a monopolistic competition framework to analyze the effects of different disclosure rules used by trade associations on the incentives to share information and on the welfare of consumers firms and society this framework is appropriate whenever a single firm cannot influence aggregate market magnitudes and serves as a benchmark for the analysis of information pooling agreements abstracting from strategic considerations i report two main results first a policy of nonexclusionary disclosure destroys the incentives to share information while exclusionary disclosure preserves them second information sharing increases expected total surplus with cournot competition but decreases it with bertrand competition in the context of a quadratic normal model with demand uncertainty

limit pricing when incumbents have conflicting interests abstract this paper considers entry into a market with two incumbents where one prefers entry and one dislikes it unlike the entrant incumbents know market demand in separating equilibria incumbents play full information nash equilibrium strategies when beliefs are unprejudiced separating equilibria only exist if entry is relatively unimportant for an incumbent in growing markets this condition will tend to be violated so that only pooling equilibria may exist

strategic information revelation we analyze the problem in which agents have non public information and are to play an asymmetric information game the agents may reveal some or all of their information to other agents prior to playing this game revelation is via exogenously specified certifiable statements the equilibria resulting from various revelation strategies are used to determine equilibrium revelation of information sufficient conditions are provided for complete revelation of all private information a number of examples are provided illustrating when revelation will or will not occur in commonly analyzed games many economic problems are characterized by the presence of both strategic behaviour on the part of individuals and by asymmetric information models encompassing both of these characteristics have been used successfully to examine questions in many fields usually using the concept of bayesian nash equilibrium as the solution concept typically the agents information is given exogenously and is fixed throughout the analysis modelling the information structure as static is appropriate for some problems but not for all in particular situations that are inherently dynamic most economic encounters allow for some interchange between the agents before the outcome is settled irrevocably in such circumstances it is possible that at least one or more of the agents possessing non public information may be able to reveal part or all of his information to one or all of the other agents in the economy during the course of their contact to the extent that such a communication is believed by the other agents the priors of the other agents will change and we will have what is in essence a new asymmetric information game new in

productivity information in vertical sharing agreements abstract that firms share information with their rivals is both well known and studied however firms also often share information with their suppliers the firm s incentive to share productivity information with both its supplier and its rival is examined it is found that by sharing productivity information a firm raises its own expected input price which raises the rival s expected input price in contrast sharing cost or demand information does not have this effect through this price effect information sharing can increase expected producer surplus in price competition while in previous work the sharing of cost information always reduced producer surplus

optimal disclosure policy in oligopoly markets this paper examines the private and social optimality of full disclosure of private information in a two period oligopoly model an incumbent firm is privately informed about the market demand and its production cost after operating as a monopolist in the first period and then competes against an entrant in the second period two main results are derived first it is shown that the incumbent is best off by pre committing to disclose both the demand and cost information by disclosing full information the incumbent nullifies its self defeating intertemporal incentives which arise whenever it has private information about the market demand its cost efficiency or both in addition the equilibrium output variance is the largest under full disclosure which benefits the incumbent ex ante second the paper shows that the incumbent s full disclosure of the demand and cost information may or may not be desirable from a social efficiency standpoint in particular the correlation between the firms production costs is crucial to the rank of disclosure policies in terms of their impact on social efficiency

certification and market transparency we provide elementary insights into the effectiveness of certification to increase market transparency in a market with opaque product quality sellers use certification as a signaling device while buyers use it as an inspection device this difference alone implies that seller certification yields more transparency and higher social welfare under buyer certification profit maximizing certifiers further limit transparency but because seller certification yields larger profits active regulation concerning the mode of certification is not needed these findings are robust and widely applicable to for instance patents automotive parts and financial products

information sharing and oligopoly in agricultural markets the role of the cooperative bargaining association we study incentives for information sharing among agricultural intermediaries in imperfectly competitive markets for farm output information sharing always increases expected grower and total surplus but may reduce expected intermediary profits even when expected profits increase with information sharing intermediary firms face a prisoner s dilemma where it is privately rational to withhold information given that other firms report truthfully this equilibrium can be avoided if firms information reports are verifiable and if firms commit to an ex ante contract that enforces participation in information sharing we show how agricultural bargaining legislation can implement such a contract with the bargained farm price representing a sufficient statistic of all information held by intermediary firms

a model of efficient discovery abstract we construct a model of costly pretrial discovery represented as learning the drift rate of a diffusion process by observing its path and settlement negotiations analyzed as a mechanism design problem in which the gains from settling are the avoided costs of a trial whose outcome is correlated with their private information we show that for this particular model the parties expected gains from a joint plan of discovery preceding the settlement negotiations are unaffected by their privately known parameters hence there is no intrinsic impediment to initial agreement on an efficient plan of discovery journal of economic literatureclassification nos c78 d74 d82 k41

majoritarian preference utilitarian welfare and public information in cournot oligopoly abstract can individual preferences for public information among heterogeneous consumers be aggregated into a meaningful social preference that does not suffer from condorcet cycles in a cournot model where homogeneous producers observe a public signal about an uncertain cost of production prior to taking quantity decisions we show that the majoritarian preference of consumers for the precision of public information is fairly well behaved so that a condorcet winner always exists under a monotonicity condition on the demand function we characterize the condorcet winning precision in terms of the demand function and the number of firms under which the condorcet winning precision i hurts consumers surplus and profits or ii remains conflict free these results have interesting implications on collective bayesian persuasion by agencies representing consumers showing that when full transparency maximizes expected consumers surplus collective bayesian persuasion can lead to full opacity and vice versa

information sharing in union firm relationships large firms often negotiate wage rates with labor unions when they do an ex ante agreement to share information should make it more likely that they will reach an agreement and capture the gains from trade however if the firm refuses to share information the union may shade down its wage demand to increase the probability of acceptance this reduction in the wage can increase the joint surplus of the agents and increase social welfare as a result there are some circumstances in which bargaining with incomplete information can be better for the agents and society than bargaining with complete information many firms and their input suppliers form long term relationships in which they periodically negotiate their terms of trade as has long been recognized the presence of private information can cause negotiations to break down on occasion resulting in an inefficient disruption of production for example the united auto workers with superior knowledge of its strike fund and or its member s outside options may call for a strike against general motors if the firm is unwilling to meet its wage demands and the firm s unwillingness to concede may be due to its superior knowledge of demand productivity and or its stock of inventories theoretically such disruptions could be avoided if the agents would simply agree to reveal their private information before the negotiations begin 2 whether or not this will occur is unclear however since some agents may be unwilling to enter into such an agreement if it sufficiently weakened their bargaining position the literatures on noncooperative bargaining and mechanism design have already dealt with many of the issues that arise in this environment in the bargaining literature it is generally assumed that the agents already possess the private information and then the implications of different bargaining processes are examined see ausubel et al 2002 for a survey in the mechanism design literature one of the questions addressed is whether the agents can find a way to commit to ex

information sharing between vertical hierarchies abstract when do principals independently choose to share the information obtained from their privately informed agents information sharing affects contracting within competing organizations and induces agents strategies to be correlated through the distortions imposed by principals to obtain information we show that the incentives to share information depend on the nature of upstream externalities between principals and the correlation of agents information with small externalities principals share information when externalities and correlation have opposite signs and do not share information when externalities and correlation have the same sign in this second case principals face a prisoners dilemma since they obtain higher profits by sharing information

microeconomic issues in the transition to a market economy evidence from developing countries suggests that a one sided preoccupation with macroeconomic issues may be unfortunate as macro stabilization programs tend to unravel in the presence of an inadequate micro adjustment for example kiguel and liviatan 1990 this finding is important because the socialist system introduced microeconomic distortions that probably transcend those observed in the third world the recent developments in poland yugoslavia and the soviet union also support the hypothesis that macro stabilization will be difficult to achieve in the transforming socialist economies in the absence of adequate micro adjustments in this paper i address what i consider to be the most important micro issues related to the transition from socialist to market economies i first summarize the initial microeconomic conditions and then describe the main changes that have taken place in the early stages of the transition finally i discuss the micro policy agenda that needs to be addressed if the transition is to be successful

too much information sharing welfare effects of sharing acquired cost information in oligopoly by using general information structures and precision criteria based on the dispersion of conditional expectations we study how oligopolists information acquisition decisions may change the effects of information sharing on the consumer surplus sharing information about individual cost parameters gives the following trade off in cournot oligopoly on the one hand it decreases the expected consumer surplus for a given information precision as the literature shows on the other hand information sharing increases the firms incentives to acquire information and the consumer surplus increases in the precision of the firms information interestingly the latter effect may dominate the former effect

customer information sharing among rival firms abstract the recent rapid growth of the internet as a medium of communication and commerce combined with the development of sophisticated software tools are to a large extent responsible for producing a new kind of information databases with detailed records about consumers preferences these databases have become part of a firm s assets and as such they can be sold to third parties this possibility has raised numerous concerns from consumer privacy advocates and regulators who have entered into a heated debate with business groups and industry associations about whether the practice of customer information sharing should be banned regulated or left unchecked this paper investigates the incentives of rival firms to share their customer specific information and evaluates the welfare implications if such exchanges are banned in the context of a perfect price discrimination model

net national product as an indicator of sustainability net national product nnp can potentially serve several objectives among others to measure value added and to be an indicator of welfare in the aftermath of the world commission on environment and development however it also seems important to investigate whether the concept of nnp can serve as an indicator of sustainability my point of departure following hicks 1946 ch 14 is therefore to require that nnp should measure what can be consumed in the present period without reducing future consumption possibilities and in line with this to argue that the nnp should equal the maximum per capita consumption level that can be sustained if sufficiently many facilitating assumptions are made then a concept of nnp that serves as an exact indicator of sustainability can easily be constructed for instance for a closed economy with a constant population a stationary technology and with only one capital good it follows that the present does not reduce future consumption possibilities if and only if it does not decrease the stock of the single capital good hence under the assumption that the one capital good k is identical to the one consumption good x nnp defined as y x k measures the maximal sustainable consumption at time t because then x y is equivalent to k the purpose of this note is to establish that with multiple capital goods it is not in general possible to construct an exact indicator of sustainability on the

optimal research for cournot oligopolists we extend the classical cournot model to take account of uncertainty in either the cost function or the demand function by undertaking research firms can acquire private asymmetric information to help resolve their uncertainty and make a more informed production decision the model is a two stage game in the first stage research levels are chosen and in the second stage conditional on private research outcomes production decisions are made we find that for a linear continuous information structure there is a unique nash equilibrium to the game in the equilibrium there may be an inefficient amount of aggregate research and there may be incomplete pooling as well the model specializes to the classical case when the cost of research is zero and each firm gains essentially the same information by doing an infinite amount of research or when the cost of research is so high no firm undertakes research

information and disclosure in strategic trade policy we relax the standard assumption in the strategic trade policy literature that governments possess complete information about the economy assuming instead that governments must obtain information from firms we examine firms incentive to disclose information to the governments in the brander spencer setting with quantity competition we find firms disclosing both demand and cost information thereby justifying the literature s omniscient government assumption with price competition however firms have no incentives to disclose demand or cost information so governments remain uninformed further with quantity competition and unknown demand governments are caught in an informational prisoner s dilemma

distributional assumptions in the theory of oligopoly information exchange abstract we analyze the profitability of information sharing among cournot oligopolists receiving private information about random demand in this setting previous authors showed information exchange to be unprofitable when firms marginal costs are constant and outputs are perfect substitutes we introduce a measure of the increase in the accuracy of firms demand forecasts when information is shared we provide two examples showing when this measure is large information exchange is profitable even though firms marginal costs are constant and outputs are perfect substitutes moreover we show that in the linear conditional expectations framework which has been standard in the literature this measure reveals these accuracy gains to be severely limited

voluntary disclosure under imperfect competition experimental evidence abstract this study investigates disclosure behavior when a firm has incentives to influence the actions of a product market rival in a cournot quantity game using an experimental economics method we find that when the firm receives private information about industry wide cost unfavorable favorable information is disclosed withheld and the rival adjusts production accordingly in contrast when the firm receives private information about firm specific cost disclosure behavior is not affected by the favorableness of the information and the rival s production decision is insensitive to the firm s disclosure choice

information sharing with capacity uncertainty the case of coffee when faced with uncertain capacity constraints coumot oligopolists face two problems should they share information once it becomes known to them and can quantity collusion be sustained this paper shows that agreeing to reveal information does not always increase expected profits as it does in previous models in which the uncertainty is a constant marginal cost parameter this paper also demonstrates that when collusion is not enforceable and information cannot be reliably shared trigger strategies can support equilibrium profits greater than cournot profits when demand is known and supply is uncertain a situation found in agricultural markets such as coffee partage de l information quand la capacite de production est incertaine le cas du cafe quand ils sont en face de contraintes incertaines sur la capacite de production les oligopoleurs a la coumot font face a deux problemes devraient ils partager l information quand elle devient connue et est ce que la collusion via les quantites est viable ce memoire montre que se mettre d accord pour partager l information n augmente pas toujours les profits anticipes comme c est le cas dans des modeles anterieurs oiu l incertitude est un parametre constant du couft marginal on montre aussi que quand la collusion n est pas vigoureusement policee et que l information ne peut pas etre fiablement partagee des strategies gachettes peuvent enclencher des profits plus grands que ceux que produisent la strategie cournot quand la demande est connue et que l offre est incertaine une situation que l on retrouve justement dans des marches de produits agricoles comme le cafe

markets for information of inefficient firewalls and efficient monopolies in this paper we study market environments where information is costly to acquire and is also useful to potential competitors agents may sell or buy reports over the information acquired and choose their trades in the market on the basis of what they learnt reports are unverifiable cheap talk messages hence the quality of the information transmitted depends on the conflicts of interest faced by the senders we find that when information has a prevalent horizontal differentiation component in equilibrium information is acquired when its costs are not too high and in that case it is also sold though reports are typically noisy the market for information is in most cases a monopoly and there is underinvestment in information acquisition we also show that regulatory interventions in the form of firewalls only make the inefficiency worse efficiency can be attained with a monopolist selling differentiated information provided entry is blocked

efficiency of conservationist measures an optimist viewpoint abstract we consider an economy with a consumer good capital a natural resource that provides amenity values and heterogeneous overlapping generations we compare a benchmark grandfathering policy that ensures efficiency through privatization with a policy of enforced resource conservation it is shown that i conservationist measures do not cause any pareto inefficiency irrespective of whether they pass a cost benefit test moreover it is shown that ii there exist pareto optimal allocations that can only be reached through resource conservation and not through competitive markets irrespective of compensating income transfers finally iii equivalence is demonstrated between strict resource conservation and non dictatorship of the present generations over future generations as formalized in chichilnisky s sustainable welfare function the results are shown to hold in both a first best and a second best setting

unraveling in first price auction abstract in a private values first price auction with random number of bidders the auctioneer has to decide whether to announce or not the actual number of bidders if the auctioneer cannot commit to any particular announcement policy then he would like to reveal when the number of bidders is high in order to increase bidding competition by the same logic the auctioneer should like to conceal if the number turns out to be small when bidders types are independent full revelation by the auctioneer is shown to be a unique equilibrium with skeptical belief as the unique equilibrium belief

duopoly information equilibrium cournot and bertrand abstract in a duopoly model where firms have private information about an uncertain linear demand it is shown that if the goods are substitutes not to share information is a dominant strategy for each firm in bertrand cournot competition if the goods are complements the result is reversed furthermore the following welfare results are obtained 1 i with substitutes in cournot competition the market outcome is never optimal with respect to information sharing but it may be optimal in bertrand competition if the products are good substitutes with complements the market outcome is always optimal 2 ii bertrand competition is more efficient than cournot competition 3 iii the private value of information to the firms is always positive but the social value of information is positive in cournot and negative in bertrand competition

duopoly information exchange the case of unknown slope abstract we model information exchange between duopolists facing a common random demand the slope of the common demand curve facing the firms is assumed unknown and firms observe private signals about this slope we show that for sufficiently large variation in the demand slope firms earn strictly higher profit when they share their information rather than keeping it private even with constant marginal costs and homogeneous goods in this case it is a nash equilibrium for the duopolists to share their information in a quid pro quo information exchange consistent with earlier models information exchange raises welfare

incentives for information production and disclosure in a duopolistic environment this paper examines the nature of the equilibrium solution to the duopoly problem under various incomplete information structures and the incentives to produce and disclose information attention is focused on the duopolists cost functions the results indicate that disclosure of such information is generally beneficial to the duopolists

uncertainty resolution private information aggregation and the cournot competitive limit a cournot model of oligopoly in which otherwise identical firms have private differential information about the common cost of production and a shared but unknown demand curve is examined a bayesian equilibrium of the corresponding game of incomplete information is solved for explicitly and analysed in the symmetric equilibrium different firms produce at different output levels because they have different information because the information individual firms have is random total output and hence market price is also random for any finite number of firms the main result of the paper relates to the asymptotic properties of the equilibrium when the number of firms becomes large under fairly general conditions on the joint distribution of demand and individual firms information about demand the random equilibrium price converges almost surely to a constant in the limit more importantly this price equals the perfectly competitive price in other words in large markets even if no firm knows the true market demand curve and firms are not price takers and do not use price as a signal to improve their information the competitive price will prevail with certainty in the limit aggregate outcomes are as if all firms shared their private information with each other

monopolistic competition aggregation of competitive information and the amount of product differentiation consider an industry with a large number of homogeneous firms each firm s profits are a function of its own strategy and the strategies the other firms select suppose other firms strategies enter into each firm s profit function only through one or more statistics for example average price in the market may parameterize every firm s profit function we prove that as a general rule the industry s firms will in equilibrium follow at most m 1 distinct strategies where m is the number of statistics by which competitors strategies affect each firm s profits

individual marketing with imperfect targetability our research investigates the competitive ramifications of individual marketing and information management in today s information intensive marketing environments the specific managerial issues we address are as follows first what kinds of incentive environments do competing firms face when they can only target individual customers imperfectly second does the improvement in an industry s targetability intensify price competition in the industry such that all competing firms become worse off third should a firm share its customer knowledge so as to improve its rival s targetability fourth how should an information vendor sell its information that can improve a firm s targetability finally do competing firms have the same incentives to invest in their own targetability to answer those questions we develop a simple model a la narasimhan 1988 in which each of the two competing firms have their own loyal customers and compete for common switchers we assume that each firm can classify its own loyal customers and switchers correctly only with a less than perfect probability this means that each firm s perceived customer segmentation differs from the actual customer segmentation based on their perceived reality these two competing firms engage in price competition as an extension we also allow the competing firms to make their investment decisions to acquire targetability we show that when individual marketing is feasible but imperfect improvements in targetability by either or both competing firms can lead to win win competition for both even if both players behave noncooperatively and the market does not expand win win competition results from the fact that as a firm becomes better at distinguishing its price insensitive loyal customers from the switchers it is motivated to charge a higher price to the former however due to imperfect targetability each firm mistakenly perceives some price sensitive switchers as price insensitive loyal customers and charges them all a higher price these misperceptions thus allow its competitors to acquire those mistargeted customers without lowering their prices and hence reduce the rival firm s incentive to cut prices this effect softens price competition in the market and qualitatively changes the incentive environment for competing firms engaged in individual marketing a prisoner s dilemma occurs only when targetability in a market reaches a sufficiently high level this win win perspective on individual marketing has many managerial implications first we show that superior knowledge of individual customers can be a competitive advantage however this does not mean that a firm should always protect its customer information from its competitors to the contrary we find that competing firms can all benefit from exchanging individual customer information with each other at the nascent stage of individual marketing when firms targetability is low indeed under certain circumstances a firm may even find it profitable to give away this information unilaterally however as individual marketing matures as firms targetability becomes sufficiently high further improvements in targetability will intensify price competition and lead to prisoner s dilemma therefore it is not only prudent politics but also a business imperative for an industry to seize the initiative on the issue of protecting customer privacy so as to ensure win win competition in the industry second we show that the firm with a larger number of loyal customers tends to invest more in targetability when the cost of acquiring targetability is high however the firm with a smaller loyal base can through information investment acquire a higher level of targetability than the firm with a larger loyal base as long as the cost of acquiring targetability is not too high as the cost further decreases competing firms will all have more incentives to increase their investments in targetability until they achieve the highest feasible level third an information vendor should make its information available nonexclusively exclusively when its information is associated with a low high level of targetability when the vendor does sell its information exclusively it should target a firm with a small loyal following if it can impart a high level of targetability to that firm finally our analysis shows that an information intensive environment does not doom small firms in fact individual marketing may provide a good opportunity for a small firm to leapfrog a large firm the key to leapfrogging is a high level of targetability or customer knowledge

quality disclosure formats in a distribution channel firms normally disclose quality information to consumers using two alternative formats either directly to consumers or indirectly through downstream retailers this study investigates optimal disclosure strategies formats in a channel setting with bilateral monopolies it shows that retail disclosure leads to more equilibrium information revelation this is because the manufacturer can through wholesale price cuts partially absorb the retailer s effective disclosure cost and thus increase the retailer s incentive for disclosure the conditions under which a particular disclosure format arises as the manufacturer s optimal choice are also examined even though direct disclosure is the ex post dominated option the manufacturer may benefit from committing ex ante to the direct disclosure format when the cost of disclosure is sufficiently high

cournot competition and the social value of information in a differentiated product cournot model each supplier receives informative signals about demand the cross industry correlations of the signals differ more public signals have higher correlation coefficients in equilibrium information is used inefficiently from the industry s perspective information is over used and too much emphasis is placed on relatively public signals from the consumer s perspective information is under used and too much emphasis is placed on relatively private signals welfare is enhanced by increasing the use of information as desired by consumers but re balancing that use away from public signals as desired by the industry if information is costly and endogenously acquired then suppliers acquire too much new information but they use it too little

on the use of heuristics to approximate competitors private information abstract firms often lack knowledge of the nature of the uncertainty they or their opponents face and use heuristics or approximations to determine their strategy we define and analyze one type of heuristic strategy in which firms choose strategies based on the expectation of their opponents private information rather than the full information about the distribution of that private information we find that in equilibrium the degree to which the heuristic strategy differs from the bayesian strategy depends on 1 the convexity of a firm s marginal profits with respect to their opponents private information and 2 whether firm strategies are complementary or substitutable under certain conditions firms equilibrium profits are greater when all firms use heuristics than when all firms use the full information our results provide insight into incentives firms may have to either facilitate or impede access to industry information

information sharing in credit markets we present a model with adverse selection where information sharing between lenders arises endogenously lenders incentives to share information about borrowers are positively related to the mobility and heterogeneity of borrowers to the size of the credit market and to advances in information technology such incentives are instead reduced by the fear of competition from potential entrants in addition information sharing increases the volume of lending when adverse selection is so severe that safe borrowers drop out of the market these predictions are supported by international and historical evidence in the context of the consumer credit market a large body of literature on credit markets has shown that asymmetric information may prevent the efficient allocation of lending leading to credit rationing e g jaffee and russell 1976 stiglitz and weiss 1981 or to a wedge between lending and borrowing rates e g king 1986 in this literature informational asymmetries are taken to be exogenous lenders fail to observe some relevant characteristic or action of potential borrowers and have no way of learning about it in some countries however lenders can improve their knowledge about new customers by exchanging information with other lenders through information brokers generally known as credit bureaus the latter collect file and distribute the information voluntarily supplied by their members and operate on the principle of reciprocity lenders who do not provide data are denied access to the bureau s files in other countries instead these institutions do not exist the literature offers no guide to identify the factors that lead to endogenous communication between lenders this paper is an attempt to fill the gap information sharing is important for a number of reasons it may increase the degree of competitiveness within credit markets vives 1990 improve

efficient use of information and social value of information this paper analyzes equilibrium and welfare for a tractable class of economies games that have externalities strategic complementarity or substitutability and heterogeneous information first we characterize the equilibrium use of information complementarity heightens the sensitivity of equilibrium actions to public information raising aggregate volatility whereas substitutability heightens the sensitivity to private information raising cross sectional dispersion next we define and characterize an efficiency benchmark designed to address whether the equilibrium use of information is optimal from a social perspective the efficient use of information reflects the social value of aligning choices across agents finally we examine the comparative statics of equilibrium welfare with respect to the information structure the social value of information is best understood by classifying economies according to the inefficiency if any in the equilibrium use of information we conclude with a few applications including production externalities beauty contests business cycles and large cournot and bertrand games

strategic information revelation in fundraising abstract we consider a model of voluntary contributions for a public project with random number of potential contributors the fundraiser who observes this number has to decide whether to reveal or suppress the information before contributions are given the fundraiser s objective is to collect maximal contributions we show that whether the public project is convex or non convex can be the key to the fundraiser s announcement decision in the convex case this number is always revealed in the non convex case the number may not be revealed at all or sometimes revealed only when it is in an intermediate range in the presence of multiple equilibria total contributions increase with the extent of concealment

monopoly competition and information acquisition abstract an incumbent monopolist is uncertain about its linear demand but can acquire public information at a cost we determine how an entry threat affects the firm s information acquisition if returns to scale are constant and the state contingent demands become more dispersed as output increases then entry reduces information acquisition if however either the incumbent or entrant has increasing returns or if the state contingent demands are nonlinear or fail increasing dispersion then entry can increase information finally entry can hurt consumers although entry always increases output it can decrease information consumers sometimes prefer a better informed monopoly to a duopoly

capital gains and net national product in open economies it is shown within a given framework that with the world economy following an egalitarian path the aggregate capital gains being positive is equivalent to the interest rate tending to decrease this result is of importance for the concept of net national product in open economies in particular with positive aggregate capital gains an open economy cannot sustain consuming the return on its capital stocks since some part of the return must be used to augment the country s national wealth it is established that a country s share of world wide sustainable consumption equals its share of worldwide wealth

conflicts of interest information provision and competition in the financial services industry abstract in some markets sellers have better information than buyers over which products best serve a buyer s needs depending on the market structure this may lead to conflicts of interest in the provision of information by sellers this paper studies this issue in the market for financial services the analysis presents a new model of competition between banks where price competition influences the ensuing incentives for truthful information revelation we also compare conflicts of interest in two different firm structures specialized banking and one stop banking

optimal bid disclosure in patent license auctions under alternative modes of competition abstract the literature on patent license auctions in oligopoly assumed that the auctioneer reveals the winning bid and stressed that this gives firms an incentive to bid high in order to signal an aggressive output strategy in a downstream cournot market game and conversely bid low to signal acquiescent pricing in a bertrand market game the present paper examines the information revealed by publishing the winning or the losing or no bid assuming an oligopoly with differentiated goods we rank disclosure rules and find that it is not optimal for the innovator to disclose the winning bid regardless of the mode of competition

information sharing and tax competition among governments abstract the residence based principle has been proposed as a second best measure to the full international coordination of capital tax policies this system requires that tax authorities have full information about the foreign investments of their residents however the degree of information transmission among governments can be considered as a strategic variable we show that under some features of the tax system there will not be any information sharing while there are institutional arrangements under which governments may transmit partial information for strategic purposes we also show that full information sharing is not necessarily a pareto optimum

disclosures and asset returns public information in financial markets often arrives through the disclosures of interested parties who have a material interest in the reactions of the market to the new information when the strategic interaction between the sender and the receiver is formalized as a disclosure game with verifiable reports equilibrium prices can be given a simple characterization in terms of the concatenation of binomial pricing trees there are a number of empirical implications the theory predicts that the return variance following a poor disclosed outcome is higher than it would have been if the disclosed outcome were good also when investors are risk averse this leads to negative serial correlation of asset returns other points of contact with the empirical literature are discussed

implementation with partial provability we extend implementation theory by allowing the social choice function to depend on more than just the preferences of the agents and allowing agents to support their statements with hard evidence we show that a simple condition on evidence is necessary for the implementation of a social choice function f when the preferences of the agents are state independent and sufficient for implementation for any preferences including state dependent with at least three agents if the social planner can perform small monetary transfers beyond those called for by f if transfers can be large f can be implemented in a game with perfect information when there are at least two players under a boundedness assumption for both results transfers only occur out of equilibrium the use of evidence enables implementation which is robust in the sense that the planner needs little information about agents preferences or beliefs and agents need little information about each others preferences our results are robust to evidence forgery at any strictly positive cost

a normalized value for information purchases consider agents who are heterogeneous in their preferences and wealth levels these agents may acquire information prior to choosing an investment that has a property of no arbitrage and each piece of information bears a corresponding cost we associate a numeric index to each information purchase information cost pair this index describes the normalized value of the information purchase it is the risk aversion level of the unique cara agent who is indifferent between accepting and rejecting the purchase and it is characterized by a duality principle that states that agents with a stronger preference for information should engage more often in information purchases no agent more risk averse than the index finds it profitable to acquire the information whereas all agents less risk averse than the index do given an empirically measured range of degrees of risk aversion in a competitive economy with no arbitrage investments our model therefore comes close to describing an inverse demand for information by predicting what pieces of information are acquired by agents and which ones are not among several desirable properties the normalized value formula induces a complete ranking of information structures that extends blackwell s classic ordering

coordination in oligopoly the private and social efficiency of two behavioral coordination mechanisms is examined in this paper in cournot oligopoly firms prefer immediate coordination on the nash equilibrium interpreted as a preplay communication over the best reply dynamics and fictitous play which converge to the equilibrium but with delay interpreted as a decentralized learning process in bertrand oligopoly firms prefer the learning process these results indicate that firms have incentives to create institutions such as trade associations or informal meetings to facilitate coordination of production capacities but not prices moreover quantity agreements may even increase social welfare

voluntary disclosure and investment in environmental technology abstract i examine the role of voluntary disclosure programs in creating market incentives for competing firms to invest in environmentally cleaner technology in an industry subject to environmental regulation such as emission taxes such programs may allow firms to credibly disclose their progress in achieving compliance cost reduction through investments in internal rd the outcome of the investment is private information i show that the ex ante incentive to invest is always higher in the presence of the voluntary disclosure program than without it in particular the opportunity to credibly disclose progress in cost reduction allows a successful firm to convey its true position of competitive advantage to the rival firm and realize higher market share and profit thus voluntary disclosure programs increase the efficacy of traditional forms of environmental regulation in creating incentives for green technological change even when buyers have no preference for greener technology i show that such programs generally increase social welfare

interbank contagion at work evidence from a natural experiment this article tests financial contagion due to interbank linkages for identification we exploit an idiosyncratic sudden shock caused by a large bank failure in conjunction with detailed data on interbank exposures first we find robust evidence that higher interbank exposure to the failed bank leads to large deposit withdrawals second the magnitude of contagion is higher for banks with weaker fundamentals third interbank linkages among surviving banks further propagate the shock finally we find results suggesting that there are real economic effects these results suggest that interbank linkages act as an important channel of contagion and hold important policy implications jel g01 g21 g28 e58 since the onset of the financial turmoil increased uncertainty reflected particularly in counterparty risk has led banks to hoard liquidity this has resulted in a significant decline of trading in the interbank money markets jean claude trichet president of the european central bank december 2008

relying on the information of interested parties we investigate the conventional wisdom that competition among interested parties attempting to influence a decisionmaker by providing verifiable information elicits all relevant information we find that if the decisionmaker is strategically sophisticated and well informed about the relevant variables and about the preferences of the interested party or parties competition may be unnecessary to achieve this result if the decisionmaker is unsophisticated or not well informed competition is not generally sufficient if the interested parties interests are sufficiently opposed however or if the decisionmaker is seeking to advance the parties welfare then competition can reduce or even eliminate the decisionmaker s need for prior knowledge about the relevant variables and for strategic sophistication in other settings only the combination of competition among information providers and a sophisticated skepticism is sufficient to allow effective decisionmaking

localized competition multimarket operation and collusive behavior this paper studies collusive behavior in a repeated oligopoly model with localized competition also reinterpreted as a model of multimarket operation private information about the rivals past actions naturally arises from these product market structures the resulting communication problems imply that firms should not adopt strategies with too severe punishments infinite grim punishments may be too severe for large discount factors the standard stick and carrot punishments from the perfect public information model are always too severe for all discount factors modified stick and carrot punishments can still be used though for a smaller range of discount factors than the standard stick and carrot punishments

secrecy two sided bias and the value of evidence abstract we provide necessary and sufficient conditions on players preferences for a verifiable message game to possess a separating equilibrium and or a pooling equilibrium as well as sufficient conditions for every equilibrium of such a game to be pooling we also characterize all nonseparating equilibria and use this property to show that less information might be conveyed in any equilibrium of a verifiable message game than in some equilibrium of the cheap talk game with the same parameters