Paper #233

Title:

Secret information acquisition in Cournot markets

Authors:

Esther Hauk and Sjaak Hurkens

Date:

March 1996 (Revised: August 1997)

Abstract:

Two-stage game models of information acquisition in stochastic oligopolies require the unrealistic assumption that firms observe the precision of information chosen by their competitors before determining quantities. This paper analyzes secret information acquisition as a one-stage game. Relative to the two-stage game firms are shown to acquire less information. Policy implications based on the two-stage game yield, therefore, too high taxes or too low subsidies for research activities. For the case of heterogeneous duopoly it is shown that comparative statics results partly depend on the observability assumption.

Keywords:

Information acquisition, oligopoly, uncertainty, Bayesian equilibrium

JEL codes:

C72, D43, D82

Area of Research:

Microeconomics

Published in:

Economic Theory, 18, 3, (2001), pp. 661-681

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