Heterogeneity and the Incentive to Share Information in Cournot Oligopoly Market

Abstract

This paper addresses the robustness of information-sharing incentives of the Cournot oligopoly firms to differences in the cost functions and the quality of information. Specifically, the author investigates which firm has more incentive to share information; the conditions under which information sharing is mutually beneficial; and when it is not mutually beneficial, the conditions under which a firm gains enough to entice the unwilling firm into sharing information by compensation. He shows that the firm with a less convex cost function has more incentives to share information and presents conditions for the latter two issues. Copyright 1994 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.