Financial prices and information acquisition in large Cournot markets

Giacomo Rondina, Myungkyu Shim

Research output: Contribution to journalArticle

3 Citations (Scopus)

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 languageEnglish
Pages (from-to)769-786
Number of pages18
JournalJournal of Economic Theory
Volume158
Issue numberPB
DOIs
Publication statusPublished - 2015 Jul 1

Fingerprint

Information acquisition
Cournot
Financial assets
Private information
Traders
Incentives
Asset prices
Strategic substitutes
Reversal
Strategic complements

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 journalArticle

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