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Information sharing in a Cournot–Bertrand duopoly
Author(s) -
Kopel Michael,
Putz Eva Maria
Publication year - 2021
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.3348
Subject(s) - cournot competition , bertrand competition , bertrand paradox (economics) , oligopoly , microeconomics , product differentiation , duopoly , economics , incentive , private information retrieval , strategic dominance , information sharing , industrial organization , statistics , mathematics , political science , law
Studies on information sharing in oligopolies focus on either Cournot or Bertrand markets. We consider a Cournot–Bertrand market where owners provide strategic managerial incentives and can share the details of their compensation contracts. We find that the Cournot firm punishes its manager for sales, whereas the Bertrand firm rewards sales. Both firms share contract information if the firms' products are sufficiently differentiated. However, if product differentiation is low, then either the Cournot firm or the Bertrand firm keeps the contract information private. Mandating information sharing can lead to an increase in consumer and social welfare but harms firms' profits.