The Advantages of Imprecise Information
A firm in a duopolistic market in which there is incomplete information about cost may benefit from having less precise prior information than its competitor. Experience in production provides firms with internally generated private signals about cost. As a result, the marginal return to production includes the value of information as well as the marginal revenue of production. Hence, the firm with less information about cost has the greater incentive to produce. Imprecise prior information thus provides a mechanism that enables the firm to commit to expand production relative to its rival.
Year of publication: |
1988
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Authors: | Gal-Or, Esther |
Published in: |
RAND Journal of Economics. - The RAND Corporation, ISSN 0741-6261. - Vol. 19.1988, 2, p. 266-275
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Publisher: |
The RAND Corporation |
Saved in:
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