Consider an oligopolistic industry where firms have access to the same technology but are asymmetrically informed about the environment. Even though it is commonplace to think that in this context superior information leads to higher profits, we find that under Cournot competition this is not generally the case: It holds when firms' technology exhibits constant returns to scale, but it does not necessarily hold otherwise. Journal of Economic Literature Classification Numbers: C72, D43, L13.
Bibliographical noteFunding Information:
1We thank an associate editor and participants of seminars at UCSD, Caltech, University of Arkansas, and University of Arizona for their comments. This work was done while Einy and Shitovitz visited the Department of Economics of the Universidad Carlos III de Madrid. The research of Einy and Shitovitz was supported by The Israel Science Foundation. Moreno acknowledges the support of the Spanish Ministry of Education, Grant PB97-0091.
- Cournot competition
- Information advantage
ASJC Scopus subject areas
- Economics and Econometrics