Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/198836
Authors: 
Fan, Cuihong
Jun, Byoung Heon
Wolfstetter, Elmar G.
Year of Publication: 
2019
Series/Report no.: 
CESifo Working Paper No. 7476
Abstract: 
We analyze spying out a rival’s price in a Bertrand market game with incomplete information. Spying transforms a simultaneous into a robust sequential moves game. We provide conditions for profitable espionage. The spied at firm may attempt to immunize against spying by delaying its pricing decision if its cost is low. This, however, adversely affects beliefs and becomes self-defeating. The spy may also be a counterspy or be fooled to report strategically distorted information. This gives rise to an intriguing signaling problem that admits only partially separating equilibria. Surprisingly, counter-espionage may aggravate the price leadership induced by spying. Altogether, our analysis offers an explanation and generalization of robust Stackelberg-Bertrand games.
Subjects: 
industrial espionage
price leadership
Stackelberg games
collusion
antitrust policy
incomplete information
JEL: 
L12
L13
L41
D43
D82
Document Type: 
Working Paper

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