Information transmission – Cournot and Bertrand equilibria

Gal‐Or, Esther

doi:10.1017/cbo9780511528231.020

Cited by 107 publications

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“…If the goods are complements, the result is reversed. Along this line, numerous papers have investigated the conditions under which oligopolists have an incentive to share private information about a stochastic demand or stochastic costs (e.g., Sakai (1985), Gal-Or (1985), Gal-Or (1986), Shapiro (1986), Ziv (1993), Raith (1996)). Similar approaches have been used to investigate the value of marketing information (Raju and Roy (2000)), information sharing in a supply chain contracting context (Lee et al (2000), Li (2002)), and sharing security information (Gal-Or and Ghose (2005)).…”

Section: Relevant Literaturementioning

confidence: 99%

Equilibrium Market Segmentation for Targeted Pricing Based on Customer Characteristics

Huang

2010

SSRN Journal

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Recent advances in information technologies create numerous opportunities for retailers to turn customer information into additional pro ts by targeted pricing: charging different prices to di erent market segments based on customer demographic variables. However, rigorous theoretical analysis regarding what is the pro t-maximizing set of variables remains scarce. This study develops a game-theoretic model to investigate this question. Results of this model suggest that a monopoly seller should use pricing variables with high explanatory power of its demand: i.e., variables with large demand coe cient or high variance. In the duopoly case, this model suggests that the value of price discrimination is the same as that in the monopoly case when only one rm uses that pricing variable. When two symmetric rms simultaneously use a pricing variable, the value of price discrimination may be higher or lower. When two rms sell substitutes and the demand is a ected by that variable in the same direction, VOPD is higher. In contrast, when the demand is a ected by that variable in the opposite direction, VOPD is lower. When rms sell complements, these e ects are reversed. This model is applied to horizontal di erentiation and vertical di erentiation to explain the puzzle that in practice similar products are often priced based on di erent variables.

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Section: Relevant Literaturementioning

confidence: 99%

Equilibrium Market Segmentation for Targeted Pricing Based on Customer Characteristics

Huang

2010

SSRN Journal

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“…This has similarities to Gal-Or (1986) who shows that producers that play a Bertrand equilibrium would try to conceal their costs from each other. According to our results, increased transparency would only be helpful up to a point, because there is a lower bound on equilibrium mark-ups when producers are pivotal.…”

Section: Introductionmentioning

confidence: 52%

Electricity Markets: Designing Auctions Where Suppliers Have Uncertain Costs

Holmberg

Wolak

2015

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractWe analyse how the market design in ‡uences the bidding behaviour in multi-unit auctions, such as wholesale electricity markets. It is shown that competition improves for increased market transparency and we identify circumstances where the auctioneer prefers uniform to discriminatory pricing. We note that political risks could signi…cantly worsen competition in hydro-dominated markets. It would be bene…cial for such markets to have clearly de…ned contingency plans for extreme market situations.

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“…16 The logic behind this result is simple. First, every cost type of, say, firm A is strictly better off if firm B produces less.…”

Section: Unmediated Communicationmentioning

confidence: 94%

Communication in Cournot oligopoly

Goltsman¹,

Pavlov²

2014

Journal of Economic Theory

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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.

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Information transmission – Cournot and Bertrand equilibria

Cited by 107 publications

References 0 publications

Equilibrium Market Segmentation for Targeted Pricing Based on Customer Characteristics

Equilibrium Market Segmentation for Targeted Pricing Based on Customer Characteristics

Electricity Markets: Designing Auctions Where Suppliers Have Uncertain Costs

Communication in Cournot oligopoly

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