Information use and acquisition in price-setting oligopolies
Journal
Economic Journal
Subject
Economics
Publishing details
Authors / Editors
Myatt D P;Wallace C
Biographies
Publication Year
2018
Abstract
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.
Keywords
Price competition; Uncertainty; Bayesian equilibrium; Information acquisition; Public and private information
Available on ECCH
No
