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Cost information sharing with uncertainty averse firms

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  • Jens Tapking

Abstract

A homogeneous Cournot duopoly with asymmetric information is analyzed. Every firm learns its own marginal cost parameter, but not the marginal cost parameter of the opponent. Every firm can commit to revealing its private information to the other firm, i.e. to share information. The influence of uncertainty aversion on the readiness of the duopolists to share cost information is analyzed. Uncertainty aversion is modeled according to the Choquet utility theory. It is shown that low uncertainty aversion leads the firms to share information, while high uncertainty aversion leads the firms not to share. A simple economic explanation for this result is given. Copyright Springer-Verlag Berlin/Heidelberg 2004

Suggested Citation

  • Jens Tapking, 2004. "Cost information sharing with uncertainty averse firms," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 23(4), pages 879-907, May.
    • Handle: RePEc:spr:joecth:v:23:y:2004:i:4:p:879-907
    DOI: 10.1007/s00199-003-0399-7
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    Citations

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    Cited by:

    1. Amir, Rabah & Jin, Jim Y. & Troege, Michael, 2010. "Robust results on the sharing of firm-specific information: Incentives and welfare effects," Journal of Mathematical Economics, Elsevier, vol. 46(5), pages 855-866, September.
    2. Mungan Murat C., 2019. "Sharing of Cost Related Information Can Increase Consumer Welfare Under Risk-aversion," Review of Law & Economics, De Gruyter, vol. 15(2), pages 1-12, July.
    3. Yin, Xundong & Wang, Sophie Xuefei & Lu, Yuanzhu & Yan, Jianye, 2023. "Endogenous information acquisition and disclosure of private information in a duopoly," Economic Modelling, Elsevier, vol. 126(C).

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