Abstract
In the context of a large Cournot market with dispersedly informed firms, we show that while output decisions are strategic substitutes, private information acquisition decisions can be strategic complements. The reversal of incentives operates through the informational role played by the price of a financial asset whose payoff depends on firms' output decisions. Our results rely on a novel mechanism whereby, holding fixed the private information of financial traders, when firms become more privately informed the financial asset price becomes less informative.
| Original language | English |
|---|---|
| Pages (from-to) | 769-786 |
| Number of pages | 18 |
| Journal | Journal of Economic Theory |
| Volume | 158 |
| Issue number | PB |
| DOIs | |
| Publication status | Published - 2015 Jul 1 |
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All Science Journal Classification (ASJC) codes
- Economics and Econometrics
Cite this
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Financial prices and information acquisition in large Cournot markets. / Rondina, Giacomo; Shim, Myungkyu.
In: Journal of Economic Theory, Vol. 158, No. PB, 01.07.2015, p. 769-786.Research output: Contribution to journal › Article
TY - JOUR
T1 - Financial prices and information acquisition in large Cournot markets
AU - Rondina, Giacomo
AU - Shim, Myungkyu
PY - 2015/7/1
Y1 - 2015/7/1
N2 - In the context of a large Cournot market with dispersedly informed firms, we show that while output decisions are strategic substitutes, private information acquisition decisions can be strategic complements. The reversal of incentives operates through the informational role played by the price of a financial asset whose payoff depends on firms' output decisions. Our results rely on a novel mechanism whereby, holding fixed the private information of financial traders, when firms become more privately informed the financial asset price becomes less informative.
AB - In the context of a large Cournot market with dispersedly informed firms, we show that while output decisions are strategic substitutes, private information acquisition decisions can be strategic complements. The reversal of incentives operates through the informational role played by the price of a financial asset whose payoff depends on firms' output decisions. Our results rely on a novel mechanism whereby, holding fixed the private information of financial traders, when firms become more privately informed the financial asset price becomes less informative.
UR - http://www.scopus.com/inward/record.url?scp=84931009353&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=84931009353&partnerID=8YFLogxK
U2 - 10.1016/j.jet.2014.12.004
DO - 10.1016/j.jet.2014.12.004
M3 - Article
VL - 158
SP - 769
EP - 786
JO - Journal of Economic Theory
JF - Journal of Economic Theory
SN - 0022-0531
IS - PB
ER -