Asymmetric information as a commitment in oligopoly

Fátima Barros*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

5 Citations (Scopus)


In this paper we show that in an oligopolistic industry that consists of identical firms, a subset of firms may find it optimal to commit to face asymmetric information about their agents' operations. Therefore some firms may choose to incur informational agency costs, even though information is available at no cost. The commitment to face asymmetric information is also a commitment on the part of the firm not to extract the entire agent's surplus and so agents have incentive to make a specific investment that increases firms' expected profits. The level of this investment increases with the proportion of firms that are not informed.
Original languageEnglish
Pages (from-to)207-225
Number of pages19
JournalEuropean Economic Review
Issue number2
Publication statusPublished - Feb 1997


  • Asymmetric information
  • Internal organization
  • Managerial incentives


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