The Korean Economic Review
Information Sharing Networks in Oligopoly
Yong-Ju Lee (Yeungnam University)Year 2014Vol. 30No. 1
We analyze the information sharing incentives of firms in a decentralized environmentwhen firms face a stochastic demand. In order to do that, we develop a two stage model ofstrategic network formation, which consists of cooperative network formation in the firststage and noncooperative Bayesian Cournot competition in the second stage. Then we derivepure strategy mixed cooperative and noncooperative equilibria that are stable and subgameperfect,and characterize the equilibrium graph structure. Our main finding is that theincentives of firms for information sharing may vary depending on whether the decision ismade in a centralized or a decentralized environment.