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Title:Exchange of private demand information by simultaneous signaling PDF Logo
Authors:Stadler, Manfred
Issue Date:2011
Series/Report no.:University of Tübingen working papers in economics and finance 17
Abstract:As is well-known from the literature on oligopolistic competition with incomplete information, firms have an incentive to share private demand information. However, by assuming verifiability of demand data, these models ignore the possibility of strategic misinformation. We show that if firms can send misleading demand information, they will do so. Furthermore, we derive a costly signaling mechanism implementing demand revelation, even without verifiability. For the case of a gamma distribution of the firms' demand variables, we prove that the expected gross gains from information revelation exceed the expected cost of signaling if the skewness of the distribution is sufficiently large and the products are sufficiently differentiated.
Subjects:Information sharing
simultaneous signaling
demand uncertainty
JEL:C73
D82
L13
Persistent Identifier of the first edition:urn:nbn:de:bsz:21-opus-57395
Document Type:Working Paper
Appears in Collections:University of Tübingen Working Papers in Economics and Finance

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