Oligopoly Information Exchange when Non-negative Price and Output Constraints may Bind |
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Authors: | David A Maleug & Shunichi O Tsutsui |
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Institution: | Tulane University,;Arthur Andersen, LLP |
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Abstract: | The oligopoly information exchange literature has consistently employed linear demand functions. This paper explores whether earlier results are sensitive to the assumption of linear demand. Non-linearity arises naturally from the condition that prices and outputs be non-negative. We show standard results on information sharing can be reversed when there is the chance that non-negativity constraints bind: in a homogeneous-goods Cournot duopoly with constant marginal costs, information sharing can be profitable and it can reduce social welfare. |
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