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Business Intelligence and Multimarket Competition
Author(s) -
BILLAND PASCAL,
BRAVARD CHRISTOPHE,
CHAKRABARTI SUBHADIP,
SARANGI SUDIPTA
Publication year - 2016
Publication title -
journal of public economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.809
H-Index - 32
eISSN - 1467-9779
pISSN - 1097-3923
DOI - 10.1111/jpet.12180
Subject(s) - competitor analysis , competition (biology) , oligopoly , externality , microeconomics , industrial organization , welfare , economics , social welfare , set (abstract data type) , competitive intelligence , business , cournot competition , market economy , marketing , ecology , biology , programming language , political science , computer science , law
We consider a multimarket framework where a set of firms compete on two oligopolistic markets. The cost of production of each firm allows for spillovers across markets, ensuring that output decisions for both markets have to be made jointly. Prior to competing in these markets, firms can establish business intelligence gathering links with other firms. A link formed by a firm generates two types of externalities for competitors and consumers. We characterize the business intelligence equilibrium networks and networks that maximize social welfare. By contrast with single‐market competition, we show that in multimarket competition there exist situations where intelligence‐gathering activities are underdeveloped with regard to social welfare and should be tolerated, if not encouraged, by public authorities.