Cournot Oligopoly with Information Sharing

Abstract

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.

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