TY - JOUR
T1 - Cooperation in a differentiated duopoly when information is dispersed
T2 - a beauty contest game with endogenous concern for coordination
AU - Cornand, Camille
AU - Ferreira, Rodolphe dos Santos
N1 - Funding Information:
We are grateful to Rabah Amir, Claude d’Aspremont, Pedro Gardete, Frank Heinemann, Hubert Kempf, as well as Luis Corchon and two anonymous Reviewers for their useful comments and suggestions. Camille Cornand is thankful to the ANR-DFG joint grant for financial support ( ANR-18-FRAL-0008-01 ASUR ). This research was performed within the framework of the LABEX CORTEX ( ANR-11-IDEX-007 ) operated by the French National Research Agency (ANR), France .
Funding Information:
We are grateful to Rabah Amir, Claude d'Aspremont, Pedro Gardete, Frank Heinemann, Hubert Kempf, as well as Luis Corchon and two anonymous Reviewers for their useful comments and suggestions. Camille Cornand is thankful to the ANR-DFG joint grant for financial support (ANR-18-FRAL-0008-01 ASUR). This research was performed within the framework of the LABEX CORTEX (ANR-11-IDEX-007) operated by the French National Research Agency (ANR), France.
Publisher Copyright:
© 2020
PY - 2020/7
Y1 - 2020/7
N2 - The paper contribution is twofold. It introduces heterogeneous information in a strategic delegation game of a differentiated oligopoly with price competition and it thus provides a micro-founded illustration of a beauty contest, in which the relative weight put on the competition motive of the payoffs is not exogenous but may be manipulated by the players. The conflict between the competition and the fundamental motives, already present in an oligopolistic setting under perfect information, is exacerbated when information is dispersed. A conflict arises also in this case between the competition and the coordination motives, ending up in the undervalueing of public information. We show how firm owners ease these conflicts by opting for some cooperation, thus moderating the competitive toughness displayed by their managers. By doing so, they also enhance the managers’ concern for coordination and consequently heighten the weight put on public relative to private information.
AB - The paper contribution is twofold. It introduces heterogeneous information in a strategic delegation game of a differentiated oligopoly with price competition and it thus provides a micro-founded illustration of a beauty contest, in which the relative weight put on the competition motive of the payoffs is not exogenous but may be manipulated by the players. The conflict between the competition and the fundamental motives, already present in an oligopolistic setting under perfect information, is exacerbated when information is dispersed. A conflict arises also in this case between the competition and the coordination motives, ending up in the undervalueing of public information. We show how firm owners ease these conflicts by opting for some cooperation, thus moderating the competitive toughness displayed by their managers. By doing so, they also enhance the managers’ concern for coordination and consequently heighten the weight put on public relative to private information.
KW - Beauty contest
KW - Competition
KW - Cooperation
KW - Coordination
KW - Delegation game
KW - Duopoly with heterogeneous information
UR - http://www.scopus.com/inward/record.url?scp=85083582802&partnerID=8YFLogxK
U2 - 10.1016/j.mathsocsci.2020.02.003
DO - 10.1016/j.mathsocsci.2020.02.003
M3 - Article
AN - SCOPUS:85083582802
SN - 0165-4896
VL - 106
SP - 101
EP - 111
JO - Mathematical Social Sciences
JF - Mathematical Social Sciences
ER -