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Published June 1987 | public
Journal Article

Optimal research for Cournot oligopolists

Abstract

An oligopolistic industry faces uncertain demand. Firms can conduct research prior to production, obtaining private data that is informative of the unknown parameters of demand. Firm strategies thus consist of a level of research and a subsequent production strategy based on their research findings. We characterize the Bayes equilibrium of such a model when demand is linear, with unknown intercept, and the information structure has linear conditional expectations. We compare the solution to an efficiency standard, finding inefficiencies even in the competitive limit.

Additional Information

© 1987 Academic Press, Inc. Received March 6, 1985; revised January 14, 1986. This paper has benefited from the comments of Leo Hurwicz, Jim Quirk, Joel Sobel, and Doug Rivers. Formerly SSWP 563.

Additional details

Created:
August 19, 2023
Modified:
October 17, 2023