Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/70395
Authors: 
Goltsman, Maria
Pavlov, Gregory
Year of Publication: 
2012
Series/Report no.: 
Research Report, Department of Economics, University of Western Ontario 2012-1
Abstract: 
We study communication in a static Cournot duopoly model under the assumption that the firms have unverifiable private information about their costs. We show that cheap talk between the firms cannot transmit any information. However, if the firms can communicate through a third party, communication can be informative even when it is not substantiated by any commitment or costly actions. We exhibit a simple mechanism that ensures informative communication and interim Pareto dominates the uninformative equilibrium for the firms.
Subjects: 
Cournot oligopoly
communication
information
cheap talk
mediation
JEL: 
C72
D21
D43
D82
D83
Document Type: 
Working Paper

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