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Welfare Effects of Endogenous Information Acquisition and Disclosure in Duopoly Markets

Author

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  • Kazunori Miwa

    (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)

Abstract

This paper investigates the interaction between firms' information acquisition decisions and disclosure of internally acquired information in a Cournot duopoly market. The results are as follows. Given that the precision of firms' private information is constant, mandatory disclosure of information about the industry-wide demand uncertainty can enhance social welfare. However, when the precision of firms' private information is endogenously determined, mandatory disclosure is not always desirable. This is because when disclosure is mandated, firms acquire less precise information compared to the case where acquired information is not disclosed, and hence their internal information environments are deteriorated. This can lead to "unintended consequences," such that disclosure regulation strictly decreases social welfare on the whole.

Suggested Citation

  • Kazunori Miwa, 2016. "Welfare Effects of Endogenous Information Acquisition and Disclosure in Duopoly Markets," Discussion Paper Series DP2016-17, Research Institute for Economics & Business Administration, Kobe University.
    • Handle: RePEc:kob:dpaper:dp2016-17
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    File URL: https://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2016-17.pdf
    File Function: First version, 2016
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    References listed on IDEAS

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    Cited by:

    1. Kazunori Miwa, 2021. "An Experimental Study on Information Acquisition and Disclosure in a Cournot Duopoly Market," Discussion Papers in Economics and Business 13-01-Rev, Osaka University, Graduate School of Economics.

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    More about this item

    Keywords

    Information acquisition; Disclosure; Duopoly; Social welfare;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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