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 |
All Science Journal Classification (ASJC) codes
- Economics and Econometrics
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Cite this
Rondina, G., & Shim, M. (2015). Financial prices and information acquisition in large Cournot markets. Journal of Economic Theory, 158(PB), 769-786. https://doi.org/10.1016/j.jet.2014.12.004