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Free keywords:
common value, product differentiation, Asymmetry, Duopoly, information disclosure, skewed distribution, Incomplete Information, laboratory experiment, Cournot competition, Bertrand competition
JEL-Codes: D82, L13, C92, D83, D22, M4
Abstract:
We study the strategic disclosure of demand information and product-market strategies of duopolists. In a setting where both firms receive information with some probability, we show that firms selectively disclose information in equilibrium in order to influence their competitor’s product-market strategy. Subsequently, we analyze the firms’ behavior in a laboratory experiment. We find that subjects often use selective disclosure strategies, and this finding appears to be robust to changes in the information structure, the mode of competition, and the degree of product differentiation. Moreover, in our experiment, subjects’ product-market conduct is largely consistent with theoretical predictions.
