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| Author: | Barros, F. |
| Title: | Asymmetric information as a commitment in oligopoly |
| Journal: | European Economic Review
1997 : FEB, VOL. 41:2, p. 207-225 |
| Index terms: | INCENTIVES ORGANIZATIONS ASYMMETRIC INFORMATION MANAGEMENT OLIGOPOLY COMPANIES |
| Language: | eng |
| Abstract: | In the paper it is shown 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. That is why some firms may choose to incur informational agency costs, even though information is available at no cost. The commitment 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. |
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