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Information Exchange in Retail Markets with Uncertainty about Downstream Costs
An information exchange between two producers selling independent prod- ucts to the same retailer can have ambiguous effects on market efficiency and surplus. When a retailer's costs are unobservable the producers may have an incentive to communicate about their negotiations with that retail...
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| Udgivet i: | MAGKS - Joint Discussion Paper Series in Economics (Band 50-2017) |
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| Hovedforfatter: | |
| Format: | Artikel |
| Sprog: | engelsk |
| Udgivet: |
Philipps-Universität Marburg
2017
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| Fag: | |
| Online adgang: | PDF-Volltext |
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| Summary: | An information exchange between two producers selling independent prod-
ucts to the same retailer can have ambiguous effects on market efficiency and
surplus. When a retailer's costs are unobservable the producers may have
an incentive to communicate about their negotiations with that retailer. If
each producer is allowed to place one offer the producers will have no incen-
tive to exchange information. However, the retailer may communicate that
he refused the first offer to the other firm which subsequently might place a
lower offer. When one firm is allowed to place a second offer, two equilibria
involve communication between the producers. In a separating equilibrium
an information exchange ensures that agreement will always be found. In a
hybrid equilibrium, the likelihood that agreement is found is less likely. |
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| Fysisk beskrivelse: | 31 Seiten |
| ISSN: | 1867-3678 |
| DOI: | 10.17192/es2024.0468 |