Information Acquisition: A (enhanced) Two-Stage Approach

This paper presents an alternative or enhanced approach to information acquisition in Cournot markets with stochastic demand in which the cost of information acquisition in endogenously determined by ...rms’ information purchasing strategy. I propose a two stage model in which in the ...rst stage each ...rm decides whether it will join a coalition to purchase information and therefore share the cost of information acquisition, to individually purchase information, or to remain uninformed. In the second-stage ...rms engage in Cournot competition to choose output. The model I propose encompasses the main assumptions of the current view on information acquisition, mainly those related to the role of information and how it a¤ects ...rms’ pro...ts. However, I will argue that by adding natural assumptions on oligopolists’ behavior, I can o¤er a model that provides a better description of ...rms’ actions and trade-o¤s than the standard view.