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Information Sharing in Oligopoly: Sharing Groups and Core-Periphery Architectures

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  • Sergio Currarini

    (School of Business, University of Leicester, University Rd., Leicester LE1 7RH, UK)

  • Francesco Feri

    (Royal Holloway, University of London, London WC1E 7HU, UK)

Abstract

The trade-off between the costs and benefits of disclosing a firm’s private information has been the object of a vast literature. The absence of incentives to share information on a common market demand prior to competition has been advocated to interpret information sharing as evidence of collusion. Recent contributions have looked at bilateral information sharing, showing that information sharing is consistent with pairwise stability, This paper studies the networked pattern of bilateral information sharing on market demand, focusing on the role of heterogeneous information (firms’ signals have different variances). We show that while pairwise stability predicts that i.i.d. signals are always shared in groups with a symmetric internal structure (both with and without side-payment and linking costs), heterogeneous signals are shared in asymmetric core-periphery architectures, in which “core” firms have more valuable information than periphery firms.

Suggested Citation

  • Sergio Currarini & Francesco Feri, 2021. "Information Sharing in Oligopoly: Sharing Groups and Core-Periphery Architectures," Games, MDPI, vol. 12(4), pages 1-17, December.
  • Handle: RePEc:gam:jgames:v:12:y:2021:i:4:p:95-:d:704896
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    References listed on IDEAS

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    1. Richard N. Clarke, 1983. "Collusion and the Incentives for Information Sharing," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 383-394, Autumn.
    2. Jackson, Matthew O. & Wolinsky, Asher, 1996. "A Strategic Model of Social and Economic Networks," Journal of Economic Theory, Elsevier, vol. 71(1), pages 44-74, October.
    3. Gal-Or, Esther, 1985. "Information Sharing in Oligopoly," Econometrica, Econometric Society, vol. 53(2), pages 329-343, March.
    4. Sergio Currarini & Francesco Feri, 2015. "Information sharing networks in linear quadratic games," International Journal of Game Theory, Springer;Game Theory Society, vol. 44(3), pages 701-732, August.
    5. Lode Li, 1985. "Cournot Oligopoly with Information Sharing," RAND Journal of Economics, The RAND Corporation, vol. 16(4), pages 521-536, Winter.
    6. Raith, Michael, 1996. "A General Model of Information Sharing in Oligopoly," Journal of Economic Theory, Elsevier, vol. 71(1), pages 260-288, October.
    7. William Novshek & Hugo Sonnenschein, 1982. "Fulfilled Expectations Cournot Duopoly with Information Acquisition and Release," Bell Journal of Economics, The RAND Corporation, vol. 13(1), pages 214-218, Spring.
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