We explore how competitive disadvantage affects firms' incentives to disclose or withhold infor Mation of common interest to competing firms within a Cournot duopoly. We establish the existence of a unique disclosure equilibrium to the problem of firms disclosing private infor Mation about aggregate demand, and show that firms choose to withhold infor Mation of either very high or very low demand. We also show that both the size of the disclosure interval and ex ante probability of disclosure decreases as the intensity of competition between firms increases.
GalOr, E.1985, Infor Mation sharing in oligopoly, Econometrica, vol. 53, pp. 329–44.
8.
GalOr, E.1986, Infor Mation transmission—Cournot and Bertrand equilibria, Review of Economic Studies, vol. 53, pp. 85–92.
9.
Grossman, S.1981, The role of warranties and private disclosure about product quality, Journal of Law and Economics, vol. 24, pp. 461–83.
10.
Jovanovic, B.1982, Truthful disclosure of infor Mation, Bell Journal of Economics, vol. 13, pp. 36–44.
11.
Jung, W. & Kwon, Y.1988, Disclosures when the market is unsure of infor Mation endowment of managers, Journal of Accounting Research, vol. 26, pp. 146–53.
12.
Kirby, A.1988, Trade associations as infor Mation exchange mechanisms, Rand Journal of Economics, vol. 19, pp. 138–46.
13.
Leland, H.1981, Comments on Grossman, Journal of Law and Economics, vol. 24, pp. 485–89.
14.
Li, L.1985, Cournot oligopoly with infor Mation sharing, Rand Journal of Economics, vol. 16, pp. 521–36.
15.
Mautz, R. & May, W.1978, Financial Disclosure in a Competitive Economy, Financial Executives Research Foundation, New York, NY.
16.
Milgrom, P.1981, Good news and bad news: Representation theorems and applications, Bell Journal of Economics, vol. 12, pp. 380–91.
17.
Novshek, W. & Sonnenschein, H.1982, Fulfilled expectations Cournot duopoly with infor Mation acquisition and release, Bell Journal of Economics, vol. 13, pp. 214–18.
18.
Verrecchia, R.1983, Discretionary disclosure, Journal of Accounting and Economics, vol. 5, pp. 179–94.
19.
Verrecchia, R.1990, Infor Mation quality and discretionary disclosure, Journal of Accounting and Economics, vol. 12, pp. 365–80.
20.
Vives, X.1984, Duopoly infor Mation equilibrium: Cournot and Bertrand, Journal of Economic Theory, vol. 34, pp. 71–94.
21.
Wagenhofer, A.1990, Voluntary disclosure with a strategic opponent, Journal of Accounting and Economics, vol. 12, pp. 341–63.
